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Full text of "Bank trust stock holdings : responses to Financial Markets Subcommittee questionnaire"

yv, f - -i\ 



94th Congress 
2d Session 



COMMITTEE PRINT 



Bank Trust Stock Holdings: 

Responses to Financial Markets 

Subcommittee Questionnaire 



COMMITTEE ON FINANCE 
UNITED STATES SENATE 

Russell B. Long, Chairman 



SUBCOMMITTEE ON FINANCIAL MARKETS 

Lloyd Bentsen, Chairman 



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x^.% 



^ V 






JUNE 1976 






69-115 



U.S. GOVERNMENT PRINTING OFFICE 
WASHINGTON : 1976 



For sale by the Superintendent of Documents. U.S. Government Printing Office 

Washington, D.C 20402 - Price 75 cents 

There is a minimum charge of $1.00 for each mail order 



COMMITTEE ON FINANCE 
RUSSELL B. LONG, Louisiana, Chairman 



HERMAN E. TALMADGE, Georgia 
VANCE IIAKTKE, Indiana 
ABRAHAM RIBICOFP, Connecticut 
HARRY F. BYRD. Jr., Virginia 
GAYLORD NELSON, Wisconsin 
WALTER F. MONDALE, Minnesota 
MIKE GRAVEL, Alaska 
LLOYD BENTSEN, Texas 
WILLIAM D. HATHAWAY, Maine 
FLOYD K. HASKELL, Colorado 



CARL T. CURTIS, Nebraska 
PAUL J. FANNIN, Arizona 
CLIFFORD P. HANSEN, Wyoming 
ROBERT DOLE, Kansas 
BOB PACKWOOD, Oregon 
WILLIAM V. ROTH, Jr., Delaware 
BILL BROCK, Tennessee 



Michael Stern, Staff Director 
Donald V. Mooreiiead, Chief Minority Counsel 



Subcommittee ox Financial Markets 
LLOYD BENTSEN, Texas, Chairman 



HARRY F. BYRD, Jr., Virginia 
WILLIAM D. HATHAWAY, Maine 



ROBERT DOLE, Kansas 
BILL BROCK, Tennessee 



Robert A. Best, Chief Economist 
(II) 



CONTENTS 



Page 

Questionnaire 3 

STATEMENTS OF THE 2 9 LARGEST TRUST DEPARTMENTS IN THE UNITED STATES 

Morgan Guaranty Trust Co. of New York 5 

Bankers Trust Co 7 

First National City Bank 10 

Chase Manhattan Bank, N.A 12 

United States Trust Co. of New York 14 

Mellon Bank, N.A. of Pittsburgh, Pa 15 

First National Bank of Chicago 18 

Manufacturers Hanover Trust Co 22 

Harris Trust and Savings Bank 24 

Bank of America 27 

National Bank of Detroit trust division 29 

Wilmington Trust Co 30 

Northern Trust Co. of Chicago 32 

First National Bank of Boston 33 

Continental Bank 33 

Chemical Bank of New York 35 

Cleveland Trust 37 

Wells Fargo Bank, N.A. trust division 40 

Girard Bank 43 

Security Pacific National Bank 44 

Crocker National Bank 45 

Wachovia Bank and Trust Co 47 

Irving Trust Co 48 

United California Bank 50 

National City Bank of Cleveland, Ohio 52 

Provident National Bank . 52 

Mercantile-Safe Deposit & Trust Co 57 

Fidelity Bank 59 

Bank of New York 60 

(Hi) 



Digitized by the Internet Archive 
in 2013 



http://archive.org/details/bankthoOOunit 



Questionnaire Submitted by Senator Bentsen on September 8, 
1975, to the Nation's 29 Largest Bank Trust Departments 



QUESTIONNAIRE 

1. "What is the total dollar amount of your assets under investment 
management as of June 30, 1975 ? 

2. What is the dollar amount of the assets you manage over which 
you exercise investment discretion ? 

3. What is the dollar amount of the employee benefit funds under 
your management ? 

4. What is the dollar amount of the employee benefit funds under 
your management over which you exercise investment discretion ? 

5. What percentage of the employee benefit funds under your man- 
agement are invested in common stocks ? 

6. Do you have invested in one security more than four percent of 
(a) your aggregate discretionary employee benefit funds, or (b) total 
assets over which you exercise investment discretion? If so, please 
list each such security and the percentage it represents. 

7. Are there instances in which (a) the aggregate discretionary em- 
ployee benefit holdings, or (b) total assets over which you exercise 
investment discretion amount to more than 8 percent of the company's 
outstanding shares ? Is so, what are the names of the companies held 
and what percentage of the shares outstanding does your holding 
represent ? 

8. For each of the companies listed in question 7, please list the 
names and primary business affiliations of any person who is an officer 
or director of both that company and of your bank. 

9. For each of the companies listed in question 7, please give an 
indication of whether or not the bank has a commercial relationship 
with the company, such as a time or demand deposit account averag- 
ing $100,000 or more over the past year, a line of credit of $1 million 
or more with the bank during the past 2 years, or a loan outstanding 
of SI million or more from the bank during the past 2 veal's. If so, 
please indicate the size of this commercial relationship. 

10. Please list the top twenty common stock holdings in your total 
portfolio,* the dollar amount of each of these holdings, the percentage 
of your total assets managed that these 20 holdings represent and the 
percentage of outstanding shares in each of these companies your 
holdings represent. 

11. There has been some concern that the prudent man rule and 
related fiduciary responsibility provisions in the new pension law 
(Employee Retirement Income Security Act of 1974) have substan- 
tially discouraged or even eliminated direct investments by pension 
managers, in small and medium size companies, in venture capital 
investments or indirect investments through venture capital funds. 
Could you indicate, including data, what impact this new pension 



*Thp data sought are for purposes of comparison with the data compiled in the July 
1973, Fortune magazine. 

(3) 



law has had on (a) your venture capital investments (h) diversifica- 
pour equi stments, and (c) diversification of the types 

. amount- of your w\ est menl 

29 LARGEST TRUST DEPARTMENTS IN THE 

UNITED STATES 

Morgan Guaranty Trust Go., West 57th Street, New York, X.Y. 

Bankers Trust Co.! ' de, New York, N.Y. 10017. 

nue,New York, N.Y. 10022. 
The Chase Manhattan Bank, N:A., 1211 Avenue of thi A teas, 

' 5 . 36. 

Ui - *, New York, N.Y. 10005, 

Mellon Bank, N.A., Mellon Square, Pittsburgh, Pa. 15230. 

Manufacturers Hanover Trust Co.. 600 Fifth Avenue, Now York, 
N.Y. t< 020. 

The First National Bank of Chicago, One First National Plaza, 
Chicago, Hi. 

Karris Trust and Savings Bank, 111 West Monroe Street. Chicago, 
111. 60690. 

Continental Illinois National Bank. 231 South La Salle Street. Chi- 
cago, 111. 60 

Bank of America. Bank of America Center, San Francisco. Calif., 
04120. 

National Bank of Detroit, Woodward and Fort. Detroit. Mien. 
48232. 

Wilmington Trust Co., 10th and Market Sts., Wilmington, Del. 
19S01. 

Northern Trust. 50 S. La Salle St., Chicago, 111. 60690. 

First National Bank of Boston, 100 Federal St., Boston, Mass. 
02110. 

Chemical Bank, 20 Pine St, Xew York. X.Y. 10015. 

Bank of New York, 40 Wall St., Xew York. X.Y. 10015. 

Cleveland Trust. 900 Euclid Ave., Cleveland. Ohio 44101. 

Wells Fargo Bank, 464 California St.. San Francisco. Calif. 94120. 

Grirard Bank, One Girard Plaza, Philadelphia, Pa. 19101. 

Security Pacific National Bank, 333 S. Hope St., Los Angeles, Calif. 
9001T. 

Crocker National Bank, 1 [Montgomery Street, San Francisco, Calif. 
94104. 

Wachovia Bank and Trust Co., Box 3099, Winston-Salem, X.C. 
27102. 

Irving Trust Co.. One Wall Street. Xew York, X.Y. 10015. 

United California Bank, 707 Wilshire Boulevard, Los Angeles, 
Calif. 90017. 

National City Bank, 623 Euclid Avenue, Cleveland, Ohio 44101. 

Provident Xational Bank, 17th and Chestnut Streets, Philadelphia, 
Pa. 19101. 



♦Source : Trust Assets of Insured Commercial Banks — 1973, Federal DeDOSlt Insurance 
Corporation. 



Mercantile- Safe Deposit and Trust Co., 2 Hopkins Plaza, Baltimore, 
Md. 21201. 

The Fidelity Bank, 135 South Broad Street, Philadelphia, Pa. 
19109. 

Response of the Morgan Guaranty Trust Co. of New York 

1. $23,525,000,000 as of June 30, 197:). 

2. $17,953,000,000 as of June 30, 1975. This figure includes invest- 
ment advisory accounts where the client exercises full voting power, 
may revoke our investment discretion at any time and where, in many 
cases, our investment discretion is limited by guidelines or objectives 
determined by the client. 

3. $14,070,000,C00 as of June 30, 1975. 

4. $13,178,000,000 as of June 30, 1975. 

5. As of June 30, 1975: At book value: 66.6 percent; at market 
value : 70.8 percent. 

6. Yes. As of June 30, 1975 one security (International Business 
Machines Common) constituted (a) 5.64 percent of aggregate dis- 
cretionary employee benefit funds (as shown in #4 above) and (b) 
5.66 percent of total assets over which the Bank exercises investment 
discretion (as shown in #2 above). 

7. Of a number of stock in which the aggregate total holdings over 
which the Bank exercises complete investment discretion amounted 
to more than 8 percent of the shares outstanding, there are listed be- 
low those in which the market value of the investment exceed $150 
million as of June 30, 1975 (we do not have voting power as to all 
such shares) : 





In thousands 






Issuer 


Total shares 
outstanding 


di 


Aggregate 

scretionary 

holdings 


Percent of 
outstanding 


International Paper 


44,141 




4,077 
2,118 
3,725 


9.24 


Pepsico, Inc 

Squibb Corp 


23,723 

44,618 


8.93 
8.35 



In the aggregate discretionary employee benefit holdings there are 
no holdings in excess of $150 million where we have 8% or more of the 
Company ? s outstanding shares. 

8. None. 

9. The Trust and Investment Division of the Bank does not have the 
information called for by this question. Such information is main- 
tained by the General Banking Division of the Bank. However, no 
response will be made to this question because our obligation of con- 
fidentiality to clients does not permit voluntary disclosure by the Bank 
of our business relationships with them. 



69-115—76- 



6 



10. Top 20 common stock holdings: 



TOP 20 COMMON STOCK HOLDINGS IN TOTAL PORTFOLIO « 
JUNE 30, 1975 

(Share and dollar amounts in thousands] 



Total Percent of Dollar 

shares Shares outstanding amount 

Security outstanding held shares held 

International Business Machines 148,259 6,452 4.35 51,348,541 

Eastman Kodak Co 161,586 8.456 5.23 873,119 

American Home Products Corp Ib6, 479 9,294 5.58 388,019 

Procter & Gamble Co 82,346 3,878 4.71 380,480 

Sears, Roebuck & Co 157,279 5,185 3.30 380,429 

Exxon Corp 223,645 3,640 1.63 336,720 

Schlumberger Ltd 55,102 3,858 7.00 335,620 

General Motors Corp 287,617 5,989 2.08 291,960 

S.S. KresgeCo 117,180 8,819 7.53 283,314 

Coca Cola Co 59,849 2,913 4.87 263,948 

International Paper Co 44,141 4,777 10.82 243,613 

Merck i Co., Inc 75,389 2,683 3.56 228,024 

Citicorp 123,467 5,884 4.77 226,532 

Halliburton Co 19,220 1,172 6.10 219,668 

Philip Morris, Inc 55,012 4,066 7.39 217,008 

Xerox Corp.. 78,680 3,038 3.86 213,015 

American Express Co 71,531 4,332 6.06 188,421 

J. C. Penney Co., Inc 59,500 3,037 5.10 176,138 

McDonalds Corp 39,843 3,064 7.69 174,628 

Dow Chemical Co 98,184 1,893 1.93 169,915 

Total. 6,939,112 



Percent of 

total 

assets 



5.73 

3.71 

1.65 

1.62 

1.62 

1.43 

1.43 

1.24 

1.20 

1.12 

1.04 

.97 

.96 

.93 

.92 

.91 

.80 

.75 

.74 

.72 



29.49 



i We do not have voting power as to all such shares. 

11. The Prudent Man Rule established by ERISA reflects to a great 
extent the philosophy and the policies of this Division. In making in- 
vestments for our clients we have always considered ourselves as fidu- 
ciaries, bound to a strict accountability for such investments. 

In testimony before the subcommittee on July 25, 1973, Mr. Samuel 
R. Callaway, the former head of the Trust & Investment Division, 
emphasized the extent of our investment in smaller companies. Mr. 
Callaway related to the attract Lveness of such investments to the risks 
attendant thereto and reported our decision to invest through com- 
mingled funds. Investment in smaller companies is made on the same 
basis as investment in larger companies: careful analysis of the finan- 
cial record of the company, up-to-date estimates of the income of the 
company, trade checks, assessment of management and consideration 
of the future of the business, 

Mr. Callaway further testified that in 10G1 we created our Special 
Situation-Equities commingled fund to invest in smaller companies, 
defined as those with market capitalization of up to $100 million. Later 
we established a fund to specialize in small-to-medium-size companies, 
those with total market capitalization between $100 million and $500 
million. 

The Commingled Pension Trust Fund (Special Situation Invest- 
ments-Equities) at June 30< 1975 had assets with a total market value 
of $556 million representing investments in 11)0 different smaller com- 
panies. The fund for intermediate size companies had $580 million 
divided among 117 companies. 

In the first nine months of 1975 we put more than $50 million into 
stocks of the Equities fund compared to something over $12 million 
in the same period L974. Investment in medium-size companies through 
the Intermediate Capitalization Equities fund (ICE) amounted to 



$119 million in the 1975 period compared to *24 million in 1974. The 
first nine months of 1975 showed initial Divestments made in 40 com- 
panies through the Equities Fund and 48 companies in the ECE fund. 

We do not anticipate any major shift in the policies and philosophy 
under which this Division has invested pension clients' money. We are 
concerned by interpretations of EEISA which project highly restric- 
tive investment policies. We view the Prudent Man Rule as a rule of 
conduct for the proper acts of trustees. 

Trustees who have acted under well drafted plans and thrust agree- 
ments, who have adhered to traditional fiduciary concepts, with advice 
and guidance of competent counsel, should have little reason to be 
concerned by the imposition of the Prudent Man Rule. 

We believe it is impossible to define what is prudent inagiven situa- 
tion by means of specific rules or regulations. ( Jonsequenl ly, we believe 
it would be unwise to issue regulal ions interpret ing "prudence." 

The statute requires diversification to minimize the risk of large 
losses, unless it is clearly prudent not to do so. New York Trust Law 
has not required diversification as a factor in determining prudence. 
However, Ave believe that our accounts have been invested with appro- 
priate regard for diversification and we do not anticipate any need to 
change our investment approach. As discussed in an earlier paragraph 
the investments made this year illustrate our continuing interest in 
small and medium size companies. Trustees should not be subject to a 
regulatory strait jacket in creating the portfolio mix but should be free 
to adjust the portfolio to the opportunities they see in the changing 
investment climate. 

Response of the Bankers Trust Co. 

Bankers Trust Co.. 
New York, N.Y., September 23, 1975. 
Senator Lloyd Bentsen, 
Committee on Finance, U.S. Senate, Washington, B.C. 

Dear Sex-ator Bextsex - : This is in reply to your letter of Septem- 
ber 8 and the attached questions addressed to Malcolm A. Stevenson, 
which has been referred to me as head of the Investment Department. 
I am enclosing a copy of our "1974 Review Trust and Investment 
Departments." * These are the latest complete figures available. 

With respect to questions 1 through 5, see table on page 9. Of total 
holdings, roughly half are fully discretionary. About TO^c of total 
holdings are employee benefit funds. 

With respect to questions G through 10, I direct your attention to 
page 9 and particularly the final column on each page "Voteable 
Sharesas Percent of Outstanding Stock'' which indicates our fully 
discretionary holdings. IBM would appear to he the only company in 
excess of 4% of our total discretionary holdings. Also, there are only 
two holdings which exceed 8% of the company's outstanding stock. 
and in both cases these are inherited personal trust holdings. I do not 
have access to our commercial banking relationships with any port- 
folio company. 

The answer to question 11 is, "not significantly." 
Sincerely yours, 
Q. U. Ford. 

* Excerpts are included in this volume. 



8 
Kv ikpts From the 1971 Review Trust and Investment 

I taPAK! Ml N l> 
I N VESTMENT HOLDINGS 

The asseta under administration by the Employee Benefit Division, 
the Persona] Trust Division and the Investment Advisory Division 
totaled SI !.:> billion at the end of 1074. Of this amount, $8.0 billion, 
or 55 percent, was represented by equity securities and $6.5 billion, or 
45 percent, by fixed income investments. 

During 1974 the United States economy was subjected to unprece- 
dented -trains which were fully reflected in the securities markets. 
The inflationary and recessionary trends that were evident in 1973 
were exacerbated by the explosion in oil prices. During the year the 
growth of the nation's money supply was restricted to a rate well 
below the rate of price increases, thus severely restricting real pur- 
chasing power. The resultant fall off in final demand w T as a major 
factor in the acceleration of recessionary trends in the economy that 
became apparent late in the year. While a strong recovery in equity 
prices was under way at year end, 1974 will rank as one of the worst 
years in this century for stock holdings. 

In this context, investment policy in 1974 of the three major invest- 
ing divisions — Employee Benefit, Personal Trust and Investment Ad- 
visory — was characterized by an increased commitment to fixed in- 
come securities. In such a changed investment environment, Bankers 
Trust Company's bond and short term money management skills 
proved particularly valuable and casli reserves as an investment ve- 
hicle were a significant factor in the bank's relative performance 
achievement. Fully discretionary tax exempt employee benefit funds, 
as an example, typically held 50-60 percent in equities and 40-50 
percent in fixed income securities, and showed overall declines in 
assets for the year of 20-25 percent. An asset diversification for these 
funds, including industry diversification of common stocks for the last 
four year ends, follows : 



EMPLOYEE BENEFIT INVESTMENT DIVISION DIVERSIFICATION OF DISCRETIONARY HOLDINGS AT MARKET VALUE 

AS OF DEC. 31. 1971-74 
[In percent) 



1974 



December 31- 



1973 



1972 



1971 



Temporary investments 12. 5 

Intermediate and long-term fixed income investments 31.9 

Common stocks: 

Air transport . 2 

Auto .2 

Building 1. 1 

Business equipment 6.9 

Chemical. 3.5 

Cosmetics .4 

Drug and household products 10.6 

Electrical equipment 3.3 

Financial 1. 5 

Food and beverage 1.3 

Hotels and restaurants . .4 

Insurance 1. 1 

Leisure.. .2 

Machinery 1. 1 

Metals 1.1 

Oil.. 8.4 

Photographic .8 

Public utility... 2.0 

Retail trade... 1.1 

Transportation 1. 1 

Allother. 4.0 

Supplemental equity fund 5.3 

Total common stocks 55. 6 

Grand total 100.0 



7.3 


6.2 


4.3 


20.9 


15.2 


21.3 


.5 


.9 


1.6 


.6 


2.2 


1.8 


.8 


.9 


2.2 


9.8 


10.0 


9.8 


1.9 


1.4 


1.2 


1.0 


2.7 


3.6 


13.0 


11.1 


8.8 


5.0 


5.0 


5.0 


1.8 


1.1 


.9 


2.1 


2.6 


2.2 


.9 


1.9 


1.5 


1.4 


1.7 


1.3 


.6 


2.2 


1.6 


.8 


.3 


.4 


1.1 


.2 


.1 


9.1 


4.5 


2.5 


2.6 


3.4 


2.7 


2.1 


2.6 


1.0 


.9 


1.7 


2.7 


.6 


.6 


i.O 


6.0 


6.0 


6.3 


9.2 


15.6 


16.2 



71.8 



78.6 



74.4 



100.0 



100.0 



100.0 



BANKERS TRUST CO. COMMON STOCK HOLDINGS OVER $5,000,000 AS OF DEC. 31, 1974 







Market vslue (in millions) 






Shares held 






Total 


Breakdown by— 




Total 


Voteable ' 

shares at 

percent of 

outstanding 

stock 




Shares (in 
thousands) 


Percent of 

outstanding 

shares 


Company name 


Employee 
benefit 


Personal Investment 
trust advisory 


International Business Ma- 
chines Corp 

American Telephone & Tele- 
graph Co 

Mobil Oil Corp 

Merck & Co., Inc 

Lilly (Eli) & Co 


$671. 2 

549.5 
254.5 
202.3 
162.9 
136.7 
130.6 

124.0 
116.1 
105.8 
98.2 

94.0 
91.0 
89.9 
83.2 
82.4 
80.6 
72.2 
71.7 
67.9 


$426. 5 

506.7 
237.2 
124.2 
142.5 
71.8 
67.0 

75.2 
91.8 
79.4 
87.3 

55.3 
73.2 
81.1 
68.0 
16.0 
32.0 
69.8 
65.7 
59.7 


$172.8 

39.5 
15.2 
60.0 
12.6 
47.9 
54.1 

36.0 

13.2 

13.2 

8.1 

29.0 

12.3 

5.8 

7.6 

40.9 

36.8 

1.4 

2.7 

.6 


$71.9 

4.2 

2.0 
17.9 

7.8 
16.9 

9.4 

12.7 

11.1 

13.1 

2.7 

9.6 
5.5 
2.9 
7.5 
25.5 
11.7 
.9 
3.2 
7.4 


3,995 

12, 339 

7,071 
3,048 
2,396 
2,175 
2,023 

3,730 
1,538 
1,308 
1,083 

2.038 
1,656 
2,015 
1,616 
2,867 
2,416 
669 
2,620 
1,414 


2.7 

2.1 
6.8 
4.0 
3.4 
1.3 
.8 

2.3 
3.9 
2.2 
2.3 

1.7 
1.7 
3.9 
2.0 
4.9 
1.3 
1.8 
2.0 
2.5 


1.9 

.4 

1.2 
2.^ 
1.5 


Eastman Kodak Co. 

Exxon Corp 

American Home Products 

Corp 

Burroughs Corp 

Johnson & Johnson 

Atlantic Richfield Co.. 


.8 
.5 

1.8 
2.6 
R.6 

1 6 


Minnesota Mining & Manu- 
facturing Co 

Dow Chemical Co. 


1.3 
1.3 


Continental Oil Co 


.5 


Xerox Corp 

Avon Products Inc 

General Electric Co 


1.1 

3.0 

.8 


Schlumberger Ltd 

Weyerhaeuser Co 


1.1 
8 


Philip Morris, Inc 


1.2 



Includes shared voting power. 



10 

Response of the First National City Bank 

1. $15,644MM.* 

2. $10,192MM. 

3. $7,691MM. 
■I. S6.538MM. 

5. 58.8 percent. 

6. Total Discretionary Assets Percent of Discretionary Equity 
Holdings: 

[BM s. 96 

M ck •!. h; 

Xerox •!. 36 

7. Total I >iscretionary I [oldings— ] toubleday & ('<».: 8.66 percent of 
shares outstanding. 

v . None. 

9. See John W. Heilshorn letter to Senator Lloyd Bentsen, dated 
September 15, 1975.** 

10. Top 20 common slock holdings: 



Top 20 holdings 



Amount 
(millions) 



As percent 

of total 

assets under 

management 



As percent of 

outstanding 

shares in the 

company 



1. International Business Machines Corp. $606 3.8 

2. Merck & Co., Inc.. 272 1.7 

3. XeroxCorp 269 1.7 

4. Eastman Kodak Co 247 1.6 

5. Johnson & Johnson 212 1.4 

6. Atlantic Richfield Co 194 1.2 

7. Eli Lilly and Co. 175 1.1 

8. General Electric Co 155 1.0 

9. Exxon Corp 153 1.0 

10. Minnesota Mining and Manufacturing Co 151 1.0 

11. S.S. KresgeCo 140 .9 

12. Sears, Roebuck & Co.. 136 .9 

13. The Coca-Cola Co.... 136 .9 

14. Caterpillar Tractor Co 136 .9 

15. Texas Instruments Inc. 119 .8 

16. J. C. Penney Co., Inc 106 .7 

17. American Home Products Corp. 104 .7 

18. Hewlett-Packard Co 100 .6 

19. Philip Morris Inc.. 95 .6 

20. Schering-Plough Corp 93 .6 

Total 23.1 



2.5 
5.5 
6.6 
2.4 
4.6 
4.6 
3.7 
2.5 
1.1 
3.0 
5.3 
1.8 
4.3 
4.9 
7.7 
3.4 
2.0 
6.2 
3.6 
3.3 



11. With respect to investment policy, Citibank's compliance with 
the prudent man rule and our fiduciary responsibility lias not changed 
as a direct result of ERISA; our gradually increasing emphasis on 
diversifying investments has been more the result of our assessment 
of trends in the securities markets and changes in the investment en- 
vironment. As an example, over V/ 2 years ago (in February. 1974) 
George M. Lingua described our established funds for investing in 
-mailer Capitalized companies in the testimony ({noted below: 

"The first Supplemental Fund was started over 10 years ago as a 
vehicle primarily to invest in -mailer companies. It is now close to 
i 2 billion dollars in market value, and was well above t hat level before 
the 1973 market slide. It is now a vehicle well suited to investment in 
a broad bank of medium size and larger companies, including some 



•All numbers ;ire as of Dec. 31, 1074. 
: See p. n. 



11 

of the so-called lower tier, for which there may be very good potential 
for earnings growth or recovery, but also a lesser degree of predicta- 
bility or confidence that the potential will be realized in each individ- 
ual case. 

The Special Equity Fund is not quite two years old. has a potential 
far beyond its present size. This fund is specifically oriented to smaller. 
expanding companies. These commingled or pooled vehicles have the 
great advantages of (1) broad diversification of risks and (2) equal- 
izing the investment experience of all participating pension trusts 
over given time periods. 

Our investment selection criteria, as adapted for candidates for this 
funds, are summarized in Exhibit III. (Investment criteria are listed 
below.) We believe they are reasonable, and we are eager to find and 
invest in smaller companies which fit these criteria in sufficient com- 
bination and degree." 

Investment Criteria: * 

(a) Competent, experienced management (especially financial 
management). 

(b) Products/services with proprietary or distinctive character- 
istics, and outstanding demand growth potential. 

(c) Demonstrated innovativeness, productivity of research. 

(d) Effective marketing, distribution system. 

(e) Manageable production costs and capital costs. 

(f) Quality of "Wall Street" sponsorship (investment banking, 
underwriting, market marking; continuing interest in and knowledge 
of company). 

We are continuing to invest in companies of smaller capitalization 
through the pooled funds as outlined by Mr. Lingua. In addition, port- 
folio diversification is achieved through the following : 

Addition of names to existing approved investment lists. We are 
continually evaluating industries and companies that may represent 
investment opportunities, however, any addition must meet our in- 
vestment selection criteria. 

Investment in high quality fixed income vehicles. The recent in- 
crease in this category represents a more balanced, long-range invest- 
ment approach, in efforts to minimize the impact of extreme volatility 
in the securities markets. 

Equity diversification among industry sectors, including technology, 
consumer services, basic industry and utility. 

Investment in high quality real estate and direct placement issues. 
We are developing our capabilities in these areas. Use of foreign 
securities is also being studied as another investment alternative. 

September, 15, 1975. 

Dear Sexator Bentsen : We have your letter of September 8th 
and will, of course, be pleased to comply with your request for the 
information outlined in your questionnaire. 

We are not in a position, however, to respond to Question #0. Citi- 
bank's conflict of interest policy requires that none of our Trust De- 
partment staff have access to information on the existence or extent 
of the commercial relationship with any of the Bank's customers (see 



♦Source: Exhibit III, Commingled Special Equity Fund. 



12 

attached copy of ••Conflicts of lute: 'i >i! excerpted from our 

Policy Manual). I suspect that most trust departments follow the 
same procedures in adhering to the "Chinese Wall" principle and. 
hence, your subcommittee may not 1 sful in developing all of 

tin* information you Beek. Recognizing that this is a common practice 
in the business, you may wish to raise the question with your staff of 
the appropriateness of seeking this information from other hank trust 
departments. 

This gratuitous observation on my part is in response to your sug- 
gestion at the dinner held at the Links Club last June that we adopt 
an attitude of complete candor in our relationship with Washington, 
particularly your office. 
Sincerely, 

John W. Heilshorx. 
Enclosures. 

IMG 'Commercial Ajreas of Bank 

You are all familiar with Citibank's Conflict of Interest statement 
and the fact that a lending officer may receive material insider infor- 
mation from a corporate borrower to assist him in evaluating a pro- 
posed loan. As a matter of policy, such information is highly re- 
stricted to those who need to know it. IMG personnel are strictly 
prohibited any access to such information. This prohibition applies 
with equal force to informal as well as formal communications. 

It is also inappropriate for IMG personnel to discuss or exchange 
information regarding any particular issuer of securities with per- 
sonnel from the commercial lending areas of the Bank. The integrity 
of the separation between the IMG and the commercial areas of the 
Bank is best preserved if communications between IMG and lending 
personnel do not involve specific companies. Utilization of the Invest- 
ment Library for industry data by commercial lending officers, how- 
ever, is permissible. For the same reason, attendance at investment re- 
search meetings and the distribution of investment material on specific 
companies are limited to IMG personnel, absent the specific approval 
of the head of the Investment Research Department. 

The foregoing principles are applicable at all times with respect to 
communications to or from members of the Investment Management 
Group whether written or verbal. 



Response of the Chase Manhattan Bank, N.A. 

1. $7,565,000,000. Represents values reported to Comptroller of the 
Currency for the year 1974. (Includes sole and shared investment 
responsibility). 

2. 84.087.000,000. Includes only accounts over which we have sole 
investment responsibility. 

8. S3. 532.000,000. Includes only those accounts over which we have 
sole or shared investment responsibility. 

4. $3,391,000,000. Includes only those accounts over which we have 
sole investment discretion. 



13 



5. 74.6 percent. Includes only those accounts over which we have 
sole or shared investment responsibility. (#3 above) 

G. (a) Yes. International Business Machines Corp. =4.04 percent. 
Note : Based on holdings as of December 31, 1974. 

(b) Yes. International Business Machines Corp. = 4.71 percent. 
Exxon Corp. = 4.24 percent. Note: Based on holdings as of December 
31, 1974. 

7. Hickory Farms, Ohio, 8.03 percent; P. R. Mallory & Co., Inc., 
8,12 percent; and Unitog, Inc., 9.15 percent. Note: Based upon Decem- 
ber 31, 1974 holdings excluding privately held non-publically traded 
companies. 

8. None. 

9. The Trust and Fiduciary Investment Departments have no knowl- 
edge of any relationships or transactions of the companies listed in the 
response to question #7 with the commercial side of the Bank. The 
Bank maintains a policy which prohibits the exchange of information 
between the Trust and Investment Departments and the commercial 
side of the Bank concerning respective account relations and informa- 
t ion developed for credit or investment purposes. 



10. From the December 31, 1974 Report- 



-Combined Holdings. 



Percent 

Amount shares 

(millions) outstanding 



Portfolio 

percent 

t)ta| 



1. Exxon Corp 

2. International Business Machine 

3. Standard Oil Co. of Indiana 

4. Eastman Kodak Co 

5. Atlantic Richfield Co 

6. American Telephone & Telegraph Co 

7. Merck & Co., Inc 

8. Mobil Oil Corp 

9. Standard Oil Co. of California.. 

10. Xerox Corp. 

11. S.S. Kresge Co.. 

12. General Electric Co 

13. International Paper Co 

14. Dow Chemical Co 

15. J. P. Morgan & Co., Inc.. 

16. American Home Products Corp 

17. Lilly (Eli) & Co.. 

18. Johnson & Johnson 

19. Citicorp 

20. Sperry Rand Corp 

Total 



$369 


2.6 


4.9 


367 


1.5 


4.9 


146 


2.4 


1.9 


106 


1.0 


1.4 


106 


2.5 


1.4 


100 


.4 


1.3 


100 


2.0 


1.3 


88 


2.4 


1.2 


78 


2.0 


1.0 


65 


1.6 


.9 


65 


2.5 


.9 


63 


1.0 


.8 


59 


3.7 


.8 


59 


1.2 


.8 


58 


3.1 


.8 


54 


1.1 


.7 


48 


1.0 


.6 


47 


1.0 


.6 


43 


1.2 


.6 


42 


4.4 


.6 


2,063 .. 




27.4 



11. (a) None, (b) None, (c) None. 

In reference to your request for a copy of the quarterly report of 
security transactions filed with the Comptroller of the Currency, we 
have not maintained the tape from which previously filed reports 
have been produced. These reports on average consist of approxi- 
mately seven hundred pages involving about 30,000 transactions. In 
the event that you wish a copy of the report for the quarter period 
ending September 30 (due to be filed on November 1) we will be 
pleased to provide you with a copy upon request. 

The Trust Department and Chase Investors Management Corpora- 
tion New York have published periodic reports of holdings since 
March of 1974. 



69-115—76- 



14 

Response of the United States Trust Co. of New York 

£13.5 billion, including not only fund- where we are investment 
manager and custodian, but funds where we are investment adviser 
but nol custodian. 
UA billion. 
$3.5 billion. 

!. $3.1 billion. 

5. 77 percent 

6. < a ) According to our estimate, Internal ional Business Machj 
common stock amounts to about 4.75 percent of our aggregate dis- 
cretionary employees benefit fund-. Note that some of these holdings 
were received as opposed to purchased by United States Trust Co. 

(h) We estimate that Internationa] Business Machines common 
stock amount- to about 8.47 percent of the total assets over which we 
exercise investment discretion. In addition. EXXON common stock 
amounts to about 4.'2~ percent of the total assets over which we 
exercise investment discretion. Again, some of these holdings were 
received from the grantors as opposed to purchased by United States 
Trust Company. 

7. Yes. The names of the companies and the percentage of shares 
we hold in each category of discretionary accounts are as follow-: 

( a ) Instances in which our aggregate discretionary employee bene- 
fit holdings amount to more than 8 percent of a company's outstand- 
ing .-hares : 

Percentage of outstanding shares 

V • >a ^-P rtAmrvonv • °f (0mmon " r Capital StOCli held 

-Name Ol COinpa.n . in discretionary account* 

Hudson Pulp & Paper 8.57 

WUI Inc 9. 81 

(b) Instances in which the total assets over which we exercise in- 
vestment discretion amount to more than 8 percent of the company's 
out standing shares: 

WUI Inc 10.33 

Hudson Pulp & Paper 8. 57 

White Martha Foods Inc 10.50 

Prentice Hall Inc 9.65 

A. T. Cross & Co. Inc. Class A 8. 37 

Aspen Skiing Corp 14.38 

8. None of the officers or directors of any company listed in Ques- 
tion 7 is an officer or director of the United States Trust Company. 

9. Information generated by a commercial banking relationship is 

not available to Trust Department personnel.* This general banking 
practice and the confidential nature of our customer relations, render 
us unable to answer this question. 

10. The twenty largest common stock holdings including holdings 
where we have no responsibility for investment management and the 
additional data requested are detailed below: 



'. w - 



; The term "trust department" as used is interpreted a? referring collectively to all 
the departments whfch manage accounts for which the Trust Company has investment 
management responsibility, whether fiduciary or agency accounts, and whether discretionary 
dr non-discretionary. 



15 



Name of company 



Estimated market 


Percent of assets 


value as of 


under investment 


June 30, 1975 


management 


$713,257,435 


5.28 


328, 160, 677 


2.43 


297, 002, 858 


2.20 


210,760,921 


1.56 


186, 468, 379 


1.37 


169, 178, 660 


1.25 


166, 259, 458 


1.22 


149, 286, 868 


1.10 


135,389,615 


1.00 


129, 685, 520 


.96 


120,215,356 


.88 


104,753,272 


.78 


94, 477, 737 


.69 


93, 387, 828 


.69 


91, 866, 937 


.68 


90, 233. 648 


.67 


85, 844, 577 


.63 


87, 756, 133 


.65 


87, 568, 568 


.65 


87, 393, 972 


.64 


85, 844, 577 


.63 



Percent of 

outstanding 

shares 



International Business Machines Corp. 

Exxon Corp 

Eastman Kodak Co... 

Proctor & Gamble Co 

Minnesota Mining & Manufacturing Co. 

Dow Chemical Co 

Sears, Roebuck & Co 

Xerox Corp 

Merck & Co 

American Home Products Corp 

Burroughs Corp 

General Electric Co 

Avon Products, Inc 

American Telephone & Telegraph Co.. 

Economics Laboratory, Inc 

Weyerhaeuser Co 

Black & Decker.. 

Phillips Petroleum Co 

Du Pont De Nemours, E. I. Co 

Bristol Myers Co 

Black & Decker Manufacturing Co 



2.30 
1.58 
1.78 
2.60 
2.42 
1.91 
1.43 
2.E8 
2.11 
1.86 
2.86 
1.08 
3.42 
.32 
22.61 
1.70 
6.05 
1.93 
1.42 
4.04 
6.05 



The percentage listings merely compare the following data: 

(a) In the first percentage column (Percent of Assets Under Invest- 
ment Management) the dollar amount of each of the top twenty hold- 
ings (which include holdings where we have no responsibility for 
investment management) is shown as a percent of assets under invest- 
ment management. 

(b) The second percentage column indicates what percent of the 
shares outstanding the dollar amount in the first column represents. 

Since the top twenty holdings include large amounts of nondiscre- 
tionary stock, we point out that neither percentage measurement ap- 
pears particularly meaningful. 

11. (a) Where appropriate, we may purchase shares in corporations 
which are not among the largest, and which Ave expect will achieve 
substantial growth over a long term. However, it has not been our 
practice to use fiduciary funds as venture capital. 

(b) In our view, diversification has always been an important con- 
sideration. Hence, we expect the new law to have little impact on the 
diversification of our equity investments. 

(c) Diversification of investments is required by our policy. [Re- 
cently, we have slightly increased the proportion of fixed income securi- 
ties. However, this increase is not a result of the new pension law. 



Response of the Mellon Bank, N.A. of Pittsburgh, Pa. 

1. $7,607,000,000 Market Value as of June 30, 1975. 

2. $4,407,000,000 Market value as of June 30, 1975. 

3. $3,782,000,000 Market value as of June 30, 1975. 

4. $2,786,000,000 Market value as of June 30, 1975. 

5. 58.4 percent. 

6. No. 

7. Yes. 

If so, what are the names of the companies held and what percentage 
of the shares outstanding does your holding represent. 



1G 

Percent age 

C, of shares 

ompanyname: outstanding 

Naloo Chemical J). 7:) 

>fcl Ion National Corp ft, h'» 



Name 



Position in company 



Position in Mellon Bank 



Nalco Chemcal 

Mellon National Corp: 

James H. Higgins 

Curtis E. Jones 

J. David Barnes 

Charles B. Jarrett, Jr. 

G. Christian Lantzsch. 



None. 



None. 



John F. Hyle 

Frederick P. Banyard.. 

John M. Arthur 

Robinson F. Barker 

Fletcher L. Byron 

Samuel B. Casey, Jr... 

John Corcoran 

B. R. Dorsey 

John A. Mayer 

Paul Mellon 

Seward Prosser Mellon. 

Nathan W. Pearson 

William H. Rea 

Willard F. Rockwell, Jr. 

John T. Ryan, Jr 

Richard M. Scaife 

William R. Snyder III. 
James W. Wilcock 



Chairman Chairman. 

President and director President and director. 

Vice president Senior vice president. 

Vice president and counsel Vice president and counsel. 

Vice president and treasurer. . Senior vice president and chief financial 

officer. 

Secretary Corporate secretary. 

Assistant treasurer Assistant comptroller. 

Di rector. Di rector. 



Do. 
Do. 
Do. 
Do. 
Do. 
Do. 
Do. 
Do. 
Do. 
Do. 
Do. 
Do. 
Do. 
Do. 
Do. 



l). On advice from counsel, the Trust Department is not entitled 
to such hank information. This question can and should be answered 
by Mr, (i. C. Lantzsch, Senior Vice President and Chief Financial 
Officer of Mellon Bank, N. A. 

10. Top 20 common stock holdings : 



Name of company 



Market value 
(millions) 


Percent of 

managed 

assets 


Percent of 

outstanding 

shares 


$462 


6.0 

3.4 

2.3 

2.2 

2.0 

1.7 

1.6 

1.6 

1.4 

1.1 

1.1 

1.1 

.9 

.9 

.9 

.9 

.8 

.7 

.6 

.6 


10.42 


261 


.84 


178 


35.93 


166 


10.14 


155 


20.01 


127 


.61 


121 


3.57 


120 


.72 


105 


12.47 


86 


1.35 


82 
81 
69 
69 

67 


.28 

8.86 

.59 

10.51 

1.05 


66 


1.71 


62 
54 
48 
47 


.45 
1.27 

.60 
1.60 


31.8 



Gulf Oil Corp 

International Business Machines 

Mellon National Corp 

Aluminum Co. of America 

H. J.Hienz... 

E xxon Corp 

Continental Oil Co 

Eastman Kodak Co 

Armco Steel Corp 

American Home Projects Corp 

American Telephone and Telegraph Co. 

General Reinsurance Corp 

Sears, Roebuck and Co. 

Naclo Chemical Co 

Merck & Co., Inc 

S. S. Kresge Co 

General Motors Corp 

Burroughs Corp 

General Electric ». 

Caterpillar 

Total 



11. The enactment of ERISA occurred so recently we feel it would 
be premature to draw any definite conclusions regarding the impact of 
the new pension law. We offer the following comments about trends 



17 

we have noticed since the enactment, but also point out that some of 

these trends became evident before 1 he passage or* VA\ I S.\ . 

A. Venture Oapitai [fmestwu nf.- -We hive a commingled equity 
fund for Employee Benefit accounts which invests primarily in small 
and medium sized companies as well as limited pari icipal ion in venl ure 
capital investments. This fund over the past five years lias not achieved 
a satisfactory rate of return and has therefore not lived up to our 
expectations. Before ERISA, we had conrluded to upgrade the overall 
quality of the fund by reducing the exposure to venture' capital sit- 
uations and emphasizing commitments to larger capitalization com- 
panies. Since the enactment of ERISA, some pension customers have 
questioned the advisability of investing their accounts in this fund in 
view of their fiduciary responsibilities under the new law. Several 
companies have directed us to either reduce or eliminate their 
participation. 

B. Diversification of Equity Investments. — Since the beginning of 
1974 the concept of increased diversification of equity holdings has 
developed among investment managers as opposed to concentration 
among fewer names which prevailed in 1971-72. Thus, there was a 
trend toward diversification prior to the enactment of ERISA. We 
began to diversify our equity investments almost two years ago. as a 
result of an investment strategy decision, primarily by participating 
in a larger number of industries. The number of names held in a port- 
folio has increased modestly and our larger commitments to certain 
industries and individual companies has been reduced. 

C. Diversification of the Type and Amounts of Investments. — As the 
result of the low returns attained from common stocks in recent time 
periods, and especially during the 1973-74 bear market, investment 
managers have been giving increased attention to the asset mix of their 
portfolios. After an analysis of the rates of return provided by various 
assets, investment managers as well as corporate pension officers con- 
cluded that there probably should be a lesser reliance on common 
equities in a total pension portfolio and more emphasis placed on 
other assets which provide a reasonable return with less volatility. We 
adopted a policy over a year ago to reduce our commitment to equities 
in a large, diversified pension portfolio over time. This strategy could 
be altered by future changes in the relative attractiveness of various 
asset groups. 

The enactment of ERISA and the concept of diversification among 
asset groups will probably reinforce this trend, which has already 
begun, toward reducing the commitment to equities. 

CONFIDENTIALSURVEY OF CORPORATE PENSION TRUST HOLDINGS OFSECURITIES ISSUED BY THE UNITED STATES 
AND BY FEDERAL AGENCIES REF. NO. 001 

NUMBER OF CORPORATE PENSION TRUST FUNDS ADMINISTERED 

Face amount 

(round to 

Issue Ref. no. thousand) 

U.S. OBLIGATIONS 
Treasury bills maturing in: 
Regular: 

July 1975 

August 1975 

September 1975 

October 1975 

November 1975 



007 


4,065 


008 


4,765 


009 


5,260 


010 


7,300 


011 


2,010 



IS 

CONFIDENTIAL SURVEY OF CORPORATE PENSION TRUST HOLDINGS OF SECURITIES ISSUED BY THE UNITED STATES 
AND BY FEDERAL AGENCIES REF. NO. 001-Continued 

NUMBER OF CORPORATE PENSION TRUST FUNDS ADMINISTERED-Continued 



Issue 



Ref. no. 



Face amount 
(round to 
thousand) 



089 


5,600 


099 


100 


118 


8,980 


110 


13, 000 



151 

179 



29X 



388 
407 



3,500 
2,900 



57, 480 



998 



750 



U.S. OBLIGATIONS-Continued 

Treasury bills maturing in— Continued 
Notes: 

7 1 j percent November 76 N 

8 percent, February 77-A 

7\ percent, April 77 H 

7', percent, May 78-D 

Bonds: 

8 1 j percent, May 90 

8' 4 percent, May 00-05 

Total face value 

OTHER GUARANTEED OBLIGATIONS 

Farm Home Administration: 
Insured notes: 

8H percent, July 85 

WASR METRO BDS 

7.75 percent July 13-C 

Partic Cert: 

Ex-im Bank 

FHLMC certificates: 8.20 percent, March 05 

FLB Bds: 

5.70, percent July 1975 

8.70, percent January 1978 

9.15 percent, July 1978 

7.15 percent, J uly 1979 

8.10 percent, July 1985 

Farm Cr Banks: Discount notes 

FNMA: 

Discount notes 

10 percent June 1976 

4^ percent, February 1977 

6.40 percent, September 1979 

8 percent, December 1983 

FHLB: 

Discount notes bonds: 

VA percent, August 1975-H 

9.10 percent, November 1975-L 

FHLB 

8.65 percent, Feburary 1979-B 

9.45 percent, February 1979-D... 

8.65 percent, May 1979-E 

9.50 percent, August 1979-C 

Total face value 

Grand total face value 





420 
434 

454 
476 
481 
490 
509 
562 

565 
580 
589 

610 .... 
631 

680 
637 

720 

721 .... 
723 
726 


10 




1,100 




r 

100 




400 




250 




800 




1,000 




2,100 




1,000 




500 




5 








1,000 




400 




240 




1,500 

"""740 
200 




79 X 


13, 968 




7XX 


71,448 



Response of the First National Bank of Chicago 



1. $0,006,000,000. 

2. $1,950,981,023. 

3. $3,586,000,000. 

4. $1,201,310,000. 

5. 63.8 percent. 

6. Xone. 

7. Xone. 

8. Xone. 

9. Xone. 



19 



10. Top 20 common stock holdings 



1. Standard Oil (Indiana).. 

2. International Business Machines... 

3. Caterpillar Tractor 

4. Schering-Plough 

5. Federated Department Stores 

6. Exxon 

7. First Chicago 

8. Minnesota Mining & Manufacturing. 

9. Atlantic Richfield... 

10. Xerox.. 

11. Sears, Roebuck 

12. Whirlpool.... 

13. Sterling Drug... 

14. General Motors 

15. General Electric 

16. Texas Utilities 

17. American Telephone & Telegraph.. 

18. Baxter Laboratories 

19. American Home Products 

20. Johnson & Johnson. 

Total. 



Market 


Percent of 


Percent of 


value of 


total assets 


outstanding 


holdings 


managed 


shares 


$585, 537 


9.65 


9.57 


166,517 


2.75 


.67 


164,843 


2.72 


5.94 


124,806 


2.06 


4.41 


96, 270 


1.59 


8.39 


88,971 


1.47 


.61 


80, 134 


1.32 


11.79 


64,031 


1.06 


1.22 


51,833 


.85 


1.22 


44,742 


.74 


1.09 


44, 537 


.73 


.58 


43,437 


.72 


8.10 


43,034 


.71 


3.05 


42,646 


.70 


.48 


42, 340 


.70 


.69 


41,128 


.68 


3.20 


40, 373 


.67 


.16 


39, 567 


.65 


3. SO 


36, 587 


.60 


.70 


33,021 


.54 


.71 


30.91 



11. There has been some concern that the prudent man rule and 
related fiduciary responsibility provisions in the new pension law 
(Employee Retirement Income Security Act of 1974) have substan- 
tially discouraged or even eliminated direct investments by pension 
managers, in small and medium size companies, in venture capital 
investments or indirect investments through venture capital funds. 
Could you indicate, including data, what impact this new pension law 
has had on (a) your venture capital investments (b) diversification 
of your equity investments and (c) diversification of the types and 
amounts of your investments. 

a. As an investor who has been governed by the Prudent Man Rule 
of the State of Illinois, we have consistently felt an obligation to 
diversify the assets under our management. We have diversified these 
assets between major classes of securities such as common stocks, fixed 
income securities, real estate and various venture capital investment-. 
We have invested approximately lli/ 2 million dollars in venture capi- 
tal investments, both directly through our own venture capital activi- 
ties as well as indirectly through several venture capital funds. 

We believe that we have been prudent in committing a very small 
percentage of our assets to venture capital, and believe that this was 
not in conflict with previously existing state Prudent Man rules. We 
do not believe that this position should be changed as a result of the 
adoption of the Federal Prudent Man Rule and related fiduciary 
responsibility provisions in the new pension law. 

If subsequent interpretations of the Pension Reform Act were to 
place limitations on venture capital activities such as those which Ave 



20 

have undertaken we would then believe thai some specific legislation 
authorizing this type of investment would become necessary. 

b. We have historically placed great emphasis on the dive r s ificati on 
01 our equity investments so a to avoid concentration in any type or 
size of company. Accordingly, the new Pension Reform Act has 
suited in no meaningful change in what was already a diversified 
equity porl folio. 

c. We have continued to diversify our portfolios across type- of 
investment (equities, bonds, real estate and cash equivalents, along 
with the modest vcni are capita] investment described above) and have 
varied this diversification based on our expectations for iviuni from 
each segment. 



21 



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22 



SUPPLEMENTAL INFORMATION 

[In percent] 

If values as of review dates used, indicate approximately the percentage 
of assets valued during the following period for each type of account : 

October, 
December November 

Employee benefit trusts 8. 33 16. 67 

Personal trusts 8.33 16.67 

Estates 8.33 16.67 

Emplovee benefit agencies 8.33 16.67 

All other agencies 8.33 16.67 

Total assets 8.33 16.67 

Note: If review dates are not used, indicate date market values were determined in last 60 days Month 
Year 

Number of accounts administered in trust department: 

(a) Trust and estates (except corporate trusts) 

(b) Cor porate accounts 

1. Trusts 

2. Registrar 

3. Tra nsf er agent 

4. Others 

(c) Agencies. 

(d) Other 

Total accounts 



July, August, 
September 



25.00 
25.00 
25.00 
25.00 
25.00 



25.00 



Day 



4.824 

2,134 

784 

132 

258 

1.910 

2,957 

1.746 



12,661 



EMPLOYEE BENEFIT ACCOUNTS! 



Type of account 



Held as trustee (1) 



Number 



Amount 



Held as agent (5) 



Amount 

(indicate where 

market value 

Number not used) 



Pension plans... 

Profit sharing plans 

Stock bonus plans 

Thrift plans 

If others (specfy): 

Suppl. employment.. 
Welfare 

Stock purchase 

Investment advisory. 

Total- 1 



300 $2,024,869,115 
162 494,711,676 



687,210,473 



57, 566, 643 
12, 336. 741 



15.626,445 



520 3. 292, 321. 098 



112 



$210,010,820 
62,137.828 



16,475,882 
3,948,675 



292,573,205 



i Insured plans or portions of plans that are founded bylinsurance should be omitted. 
2 Totals should equal totals in cols (1) and (5) on the front of this report. 

Note: Total resources as of June call $17,592,261,200.49. Questions concern r.g the preparation of this report may be 
referred to Barry Wol'gram, tru?t officer. 



Response of the Manufacturers Hanover Trust Company 



1. The total dollar amount of assets under investment management 
was $9,298,541,000 as of September 30, in;:>. 

'1. The i' si ;il dollar amount of the assets over which wo exercise sole 
or shared investment authority was approximately so. 97 billion as of 
Septemb ,; 7:». 

3. The total dollar amount of employer benefit funds under manage- 
ment was $5,109,541,000 as of September 30,1975. 

'. The total dollar amount of employee benefit funds over which 
we exercise sole or shared investment authority was approximately 
illion as of September 30, 1^7r>. 



23 

5. As of September 30, 1975, 58.7 percent of the employee benefit 
funds under our management were invested in common stocks. 

6. a. Xo. 

b. As of September 30. 1075. our holdings of IBM common shares 
in accounts over which we exercise investment discretion represented 
5.^ percent of our total supervised assets. 

7. a. As of September 30, 11)75 we held 8.9 percent of the outstand- 
ing shares of Automatic Data Processing in employee benefit funds 
over which we exercise some investment authority. 

b. In cur total discretionary assets, we held 9.0 percent of Automatic 
Data Processing's outstanding shares. 

8. There are no such affiliations between Manufacturers Hanover 
and Automatic Data Processing. 

9. It is our policy to separate the functions of our trust division and 
our banking department. Accordingly, we do not have available infor- 
mation concerning Automatic Data Processing (the company referred 
to in our answer to your item 7), and thus are unable to respond to 
your item 9. In view of our policy of separation, we believe it is in- 
appropriate for us to identify this company to our banking depart- 
ment either for it to give us the information to forward to you or for 
it to forward the information directly to you. We respectfully suggest 
that you address inquiries concerning banking relations of this com- 
pany to our banking division. For operational purposes, our banking 
department has a metropolitan division, a national division, and an 
international division and we do not know which, if any, of those 
divisions may have such banking relations. Accordingly, if you make 
such inquiry, we suggest they be directed to Mr. Charles E. Woodruff, 
Vice Chairman of the Board. 

10. Listed below are the largest twenty holdings in our total port- 
folio of assets under investment management as of September 30, 1975. 
We do not have investment authoritv over all of these assets. 



Name 





Outstanding market value 


Percent 

of total 

portfolio 


Total shares 


Sept. 30, 1975 


Sept. 30, 1975 


2, 187, 268 


1.5 


416, 830, 0C0 


4.5 


12,747,251 


4.7 


299, 560, 000 


3.2 


4, 472, 668 


6.6 


238, 170, 000 


2.6 


2, 604, C89 


1.2 


230, 629, 000 


2.5 


1. 985, 951 


1.2 


182, 889, 000 


2.0 


1,209,963 


1.3 


103, 988, 000 


1.1 


1,759,822 


2.9 


99, 863, 000 


1.1 


889, 638 


1.9 


89, 289, 000 


1.0 


1,975,178 


7.4 


85, 790, 000 


.9 


1,073,095 


1.9 


84, 610, 000 


.y 


1, 174, 067 


2.1 


77, 696, 000 


.8 


1,418,820 


5 


73.956,000 


.8 


949, 366 


2.6 


69, 541, 000 


R 


668, 219 


2.5 


65,402,000 


.7 


1,330,153 


.3 


63, 487, 000 


.7 


1,944,258 


1.2 


51,973,000 


.7 


" 1,133,462 


1.4 


60, 073, 000 


.7 


937, 433 


.6 


57, 886, 000 


.6 


2,162,497 


7.3 


57, 306, 000 


. D 


463, 8S3 


3.9 


54, 912, 000 


.6 



International Business Machines Corp. 

Texaco, I nc 

Shell Oil Co. 

Exxon Corp 

Eastman Kodak Co. 

Dow Chemical Corp 

Union Carbide Corp 

Atlantic Richfield Co. 

Cities Service Co 

Johnson & Johnson 

Caterpillar Tractor Co. 

General Motors Corp 

Schlumberger 

Hewlitt-Packard Co.... 

American Tel. & Tel. Co 

American Home Products 

Xerox Corp 

Sears. Roebuck & Co. 

Manufacturers Hanover 

Digital Equipment Corp 

Total 



11. As a trust company incorporated under the laws of the State of 
Xew York and acting as a fiduciarv under the laws of tint state, we 



24 

always have been subject to i prudent man requirement which was 

sel tniih in an L869 case, ••. . . that tht ju.-t and troe rule is, that 
the trustee is bound to employ such diligence and such prudence in the 

rare and management (of a trust), as in general, prudent men of dis- 
cretion ami intelligence in such matters, employ in their own affairs. 93 
What is "prudent" depends upon all the facts and circumstances, in- 
cluding the economic, Legislative and judicial climate. We think that 
the enactment of a Federal "prudent man"' rule in Section 404 (a) 
(1) (B) -.!" the Employee Retirement Encame Security Act. of 1974 
nas not significantly changed the principles of the "prudent nan" rule, 
and accordingly has not had any appreciable impact on (a) our ven- 
ture .-apital investments, (1>) diversification of our equity investments 
and (c) diversification of the types and amounts of our investments. 
in New York, at least, the Federal statute has merely continued in 
effect a ride to which fiduciaries have been subject for over a hundred 
years. Its impact has been negligible, compared with such change 
law over the decades as the amendment to the New York statute in 
that for the first time added common stocks to the "legal list" 
of permitted investments and the amendment in 1070 that established 
a straight "prudent man" rule without any "legal list.*' 



Response of the Harris Trust and Savings Bank 

1. October 31, 107-1: Asset value reported to the Federal Reserve 
Bank of Chicago, $6,416,731,421.* 

June 30, 1075: Estimated value of assets under investment manage- 
ment, s7.9!><).049,000. 2 

•1. Estimated value as of June 30. 1975, $7,902,959,000. 

3. October 31, 1974: Asset value of emplovee benefit funds reported 
to the Federal Reserve Bank of Chicago. $3,246,745,505. 

June 30, 1975: Estimated value of emplovee benefit fund- assets 
under management, $4,132,865,000. ' 

4. Estimated value as of June 30, 1975, $3,538,584,000. 

5. Estimated percentage as of June 30, 1975. 61.1 percent. 

6. (a) No one security "held with investment discretion in Employee 
Benefit Funds has an aggregate value in excess of 4% of the value 
of the aggregate Emplovee Benefit Funds over which we exercise 
investment discretion. 

(b) The following common stock held with investment discretion 
has an aggregate value in excess of 4% of the aggregate value of all 
assets over which we exercise investment discretion: Kellogg Co. 
common stock, 9.40 percent. 

This 9.40 percent represents a value as of June 30, 1975 of $750,- 
0)90.320 of which $741,617,840 is attributable to shares held in the 



1 The format and content of the Trust Department Annual Report Form FR-437, filed 
with the Federal Reserve Bank of Chicago for the year, 1974, with asset valuations as of 
Oct. 31, 1974. has been used as a base for the development of some of the data required 
for response to this questionnaire. 

3 Composed of the following elements : 

n. Stocks at 128.29 percent of Oct. 21, 1974 market value to reflect increase in the 
standard and Poor "r>00" Index from Oct. 81, 1974 through June 30, 1975. 

b. Bonds actually held at June 30, 1975 valued at par. 

c All other types of assets valued as a group at an estimated 3 percent of the total 
value of stocks and bonds at June 30, 1975 as estimated herein. 



25 

W. K. Kellogg Foundation Trust. Investment discr&ion with respect 
to all assets of this trust is shared by the Bank Trust Department 
with three individual trustees. 

7. (a) There are no instances in which the aggregate Employee 
Benefit Fund holdings over which we exercise investment discretion 
exceed, in the case of any single security, 8 percent of the shares out- 
standing of that security. 

(b) There are four instances in which the aggregate holding of 
a single security over which we exercise investment discretion exceeds 
8 percent of the shares outstanding of that sedulity: 

Percent of 
Companij name OutiUtKWnti 

Combined Communications Corp 8. 02 

Harris Bankcorp, Inc k 2r>. 29 

G. D. Searle and Co 27.28 

Kellogg Co 49. 76 

1 Includes percentage of outstanding shares over which Bank Trust Department has 
shared investment discretion as follows : Combined Communications Corp., 8.02 percent ; 
Harris Bankcorp. Inc. 25.77 percent; G. D. Searle and Co., 2.48 percent; and Kellogg Co., 
4!>.44 percent. 

8. List of names and affiliation : 

Name of directors and principal Primary Business Affiliation 
Company name officers 

G. D. Searle & Co Daniel C. Searle Chief executive officer— G. D. Searle & Co. 

Chalkley J. Hambleton. President and director— Harris Bankcorp, Inc. and 

Harris Trust and Savings Bank. 

Harris Bankcorp, Inc William F. Murray Chairman of the board— Harris Bankcorp, Inc. and 

Harris Trust and Savings Bank. 

Stanley G. Harris, Jr Vice chairman of the board— Harris Bankcorp, Inc. and 

Harris Trust and Savings Bank. 

Chalkley J. Jambleton President— Harris Bankcorp, Inc. and Harris Trust and 

Savings Bank. 

Bennett Archambalut.. Chairman and president— Stewart-Warner Corp. 

John W. Baird President— Baird & Warner, Inc. 

Joseph A. Burnham President and chief executive officer— Marshall Field 

&Co. 

James W. Button Senior vice president-Merchandising, and director- 
Sears, Roebuck and Co. 

Samuel S. Greeley President and chief executive officer— Masonite Corp. 

Robett C. Gunness Former vice chairman of the board— Standard Oil Co 

(Indiana). 

Huntington Harris. Trustee— Estate of Norman W. Harris. 

Donald P. Kelly... President and chief operating officer-Esmark, Inc. 

Joseph B. Lanterman Chairman— AMSTED Industries Inc. 

Remick McDowell Retired chairman of the executive committee— Peoples 

Co. 

Arthur C. Nielsen, Jr President— A. C. Nielsen Co. 

James E. Oslon President— Illinois Bell Telephone Co. 

George A. Ranney Vice chairman— Inland Steel Co. 

Daniel C. Searle Chief executive officer— G. D. Searle & Co. 

Maynard P. Venema Past chairman of the board— UOP, Inc. 

Theodore H. Roberts i Executive vice president, secretary and treasurer- 
Harris Bankcorp, Inc. Executive vice president- 
Harris Trust and Savings Bank. 

Charles M. Bliss i Executive vice president— Harris Bankcorp, Inc. and 

Harris Trust and Savings Bank. 

Kent W. Duncan i... Executive vice president— Harris Bankcorp, Inc. and 

Harris Trust and Savings Bank. 

1 Bank officer— not a director. 

9. Combined Communications Corp. — No relationship. 

Harris Bankcorp, Inc. — Harris Trust and Savings Bank is a wholly 
owned subsidiary of Harris Bankcorp, Inc., a bank holding company, 
and on a regular basis borrows money from its parent on time certifi- 
cates of deposit in large amounts. The company also has a demand 
deposit account with the bank. 



26 

(t. I). Searle & Co. — This company is an important commercial 
customer and lias a substantia] line of credit against which it can 
borrow. It has been using it- line in 1974 and 197") in significant 
amounts in excess of $1 million. The company has demand deposit 
accounts averaging in excess of $1 million. From time to time it may 
purchase time certificates of deposit from the bank- in amounts of 
$100,000 or more, but our records do not permit us to determine 
readily what the amounts or time periods involved may have been. 

Kellogg Co. — This company is an important commercial customer 
and has a substantial line of credit against which it can borrow. It 
has not borrowed against this line in l n 71 or in 1975 to date. The 
company has demand deposit accounts averaging in excess of $1 
million. From time to time it may purchase time certificate- of 
deposit from the bank in amounts of $100,000 or more, but our rec- 
ords do not permit us to determine readily what the amounts <•!• 
time periods involved may have been. 

10. Top 20 common stock holdings : 



Name cf stock 



Kei'opg Co 

G. D. Searle 

International Business Machines... 

Exxon 

Fastman Kodak Co 

Standard Oil Co. of Indiana 

American Home Products 

Dow Chemical 

Minnesota Mining & Manufacturing. 
American Telephone & Telegraph.. 

General Electric 

Citicorp... 

General Motors 

Weyerhaeuser 

Sears 

Phillip Morris 

Burroughs Corp.. 

Motorola 

Texaco 

Colgate Palmolive 

Total 





Percent of total 






assets! man- 




Value 


aged it 


Percent cf 


('.housands) 


represents 


outstanding 


$750, 690 


9.395 


49.76 


280, 944 


3.338 


27.28 


216, 868 


2.577 


.70 


136, 865 


1.626 


.f6 


96, 659 


1.148 


.58 


90, 300 


1.073 


1.2* 


81,563 


.969 


1.25 


74,919 


.890 


.90 


70,517 


.838 


.92 


66, 352 


.788 


.23 


66, 094 


.785 


.69 


64, 591 


.767 


1.36 


58, 852 


.699 


.42 


57, 704 


.686 


1.09 


55, 867 


.664 


.48 


51,968 


.617 


1.74 


51,770 


.615 


1.23 


49, 462 


.588 


3.49 


47, 587 


.565 


.66 


45,675 


.543 


2.07 


29.171 



1 Percent of total assets managed over which Bank Trust Department has investment discretion. 

11. The new pension law has had no effort on (a) our venture capi- 
tal investments, (b) diversification of our equity investments or (e) 
diversification of the types and amounts of our investments in pen- 
sion or profit sharing funds except in a very few instances in which 
the customer has requested a change in the basic stock/bond propor- 
t ions that were represented in his fund. 

The fact that the new pension law has had no effect does not neces- 
sarily mean that it does not tend to substantially discourage invest- 
ments by pension managers in small and medium size companies. Tt 
is our view that the new pension law substantially mirrors the 
"Prudent Man Rule'' that has prevailed for many years on a state by 
.-late basis. The application of this rule has very much tended to cm use 
a major focus on each individual issue held within a portfolio and has 
iriven very little attention to the characteristics of the portfolio as a 
whole. 



27 

If investments in small and medium size companies are to be en- 
couraged, it would seem that some shift in emphasis should occur in 
the application of the Prudent Man Rule, i.e.. it should shift more 
attention to the characteristics of the total portfolio and the suita- 
bility of those overall characteristics in light of the requirements and 
circumstances surrounding any particular fund. Such an approach 
would be far preferable to an arbitrary small percentage of the total 
portfolio that could be invested without regard for risk. 

We maintain a collective investment fund for pension and profit 
sharing accounts through which we invest in common stocks of com- 
panies of smaller capitalization than those we consider proper for 
use on our Working List of approved investments for fiduciary ac- 
counts. As of June 30, 1975. this fund was valued at $103 million, in- 
vested in approximately 70 different companies. There is a limit on 
the percentage of the assets of any employee benefit trust that may be 
invested in this commingled fund which, at present, is expressed at 
:/'( of the total account in some cases or 10% of the common stock 
portfolio in other cases. In most accounts the current percentage is 
well below the limit. 



Response of the Bank of America 

1. The total dollar amount of our assets under investment manage- 
ment as of June 30, 1075 is $5,571,945,511. 

•2.. The dollar amount of the assets we manage over which we exer- 
cise investment discretion is $0,095,838,420. 

3. The dollar amount of the employee benefit funds under our man- 
agement is S5.527. 148.979. 

-1. The dollar amount of the employee benefit funds under our man- 
agement over which we exercise investment discretion is $1,903,805,737. 

5. Approximately 60 percent of the employee benefit funds under 
our management are invested in common stocks. 

6. We do not have more than 4 percent of one security invested in 
(a) our aggregate discretionary employe benefit funds or (b) total 
assets over which we exercise investment discretion. 

7. There are no instances in which (a) the aggregate discretionary 
employee benefit holdings, or (b) total assets over which we exercise 
investment discretion amount to more than 8 percent of the company's 
outstanding shares. 

8. Not applicable. 

9. We are unable to respond to this question for several reasons. 
First, the Trust Department of the Bank does not maintain records 
or have information on the commercial relationships with the Bank 
of issuers whose securities may be held in our trust portfolio. Secondly, 
because of our duty not to utilize or gain access to "inside informa- 
tion" imposed as a matter of public policy by both the common law 
and the Federal securities laws we feel it would be improper for us to 
attempt to obtain the information requested. Finally, even if the in- 
formation were requested of the commercial side of the Bank we be- 
lieve that disclosure of this information without the consent of each 
customer would breach the Bank's duty of confidentiality concerning 
its transactions and relationships with its customers. While we are 
endeavoring to be as helpful as possible we hope you will understand 



2€ 
our reluctance to reply to this item for the public policy and legal 

reason- we have stated. 

10. Top 20 common stock holdings : 

TOP 20 COMMON STOCK HOLDINGS BANK OF AMERICA TRUST DEPARTMENT 



International Business Machines Corp. 

Exxon Corp 

Bank America Corp 

Dow Chemical Co 

American Tel. & Tel. Co 

Getty Oil Co 

Atlantic Richfield Co 

General Electric Co 

Minnesota Mining & Mfg. Co 

Standard Oil Co. (Indiana). 

American Home Products Corp 

Eastman Kodak Co 

Halliburton Co 

Federated Department Stores, Inc 

Standard Oil Co. (Ohio) 

Sears, Roebuck & Co 

General Motors Corp 

Ingenoll-Rand Co.. 

Union Carbide Corp... 

Merck & Co., Inc 

Total 





Estimated 


Percent 






market 


holdings 


Percent of 


Shares 


value 


trust 


shares 


(thousands) 


(thousands) 


department 


outstanding 


395 


573, 489 


2.4 


0.27 


667 


57,622 


1.8 


.29 


1. 164 


48,906 


1.6 


1.70 


466 


40. 640 


1.3 


.50 


764 


37, 160 


1.2 


.13 


201 


36, 196 


1.2 


1.10 


330 


33,347 


1.1 


.70 


725 


32,664 


1.1 


.39 


546 


30,904 


1.0 


.48 


691 


30,518 


1.0 


.47 


807 


27,041 


.9 


.51 


294 


26, 908 


.9 


.18 


159 


26, 459 


.8 


.83 


527 


23,735 


.8 


1.20 


286 


23, 223 


.7 


.79 


369 


22.785 


.7 


.23 


436 


21,665 


.7 


.15 


285 


21, 193 


.7 


1.60 


375 


21,107 


.7 


.61 


286 


19,956 


.6 


.38 


21.2 



11. (a) Bank of America Trust Department has almost never par- 
ticipated in the traditional venture capital type investments, (b) the 
investment policy of the Hank's Trust Department has always stressed 
broad diversification. This is evidenced by the small percentages of 
our assets invested in our top 20 holdings, (c) the Trust Department 
lias in the past and still invests in the high quality small to medium 
sized companies primarily through the use of a pooled fund for em- 
ployee benefit accounts. Only a very few of the personal trust accounts 
in the Bank are suitable for the use of small company securities. 

Addendum 

The below listed elaborations and question reference numbers are 
submitted to assist in clarifying our responses where it was felt a pos- 
sibility of misinterpretation was possible. 

1. Investment management interpreted as a fiduciary relationship. 
Therefore, our answer includes shared responsibility as well as sole 
investment responsibility. 

2. Investment discretion interpreted as sole investment responsibil- 
ity. Therefore, our answer does not include any assets with shared 
investment responsibility. 

3. Your management interpreted as a fiduciary relationship-in- 
cludes shared and sole responsibility. 

4. Investment discretion interpreted as sole responsibility-shared 
responsibility not included in total. 

5. Your management interpreted as a fiduciary-shared responsi- 
bility included. 

6. and 7. Aggregate discretionary and investment discretion inter- 
preted as sole investment responsibility. 

10. Total portfolio and assets managed interpreted as a fiduciary- 
shared responsibility included. 



29 



Response of the National Bank of Detroit, Trust Division 

1. $6,876,8^000. 

2. $3,534,960,000. 

3. $4,905,155,000. 

4. 8-3.177,849,000. 

5. 1)4.11 percent. 

('). Our records indicate that there is only one security (Dow ( Jhemi- 
eal Company common stock) in which we have more than four percent 
of (a) our aggregate discretionary employee benefit funds (0.41 per- 
cent) or (b) our total assets over which we exercise investment dis- 
cretion (5.76 percent) invested. 

7. Our records indicate that there is only one security in which (a) 
the aggregate discretionary employee benefit holdings or (b) total 
assets over which we exercise investment discretion amount to more 

v, 



than 8 percent of the company's outstanding shares. We have 
percent of the Trane Company common stock held in Trust account- 
over which we exercise investment discretion. 

8. There are no individuals who are both an officer or director of 
(a) the Trane Company and (b) the National Bank of Detroit or our 
parent company, the National Detroit Corporation. 

9. Information on the commercial account relationships of the Na- 
tional Bank of Detroit is not available to individuals in the Trust 
Division of the National Bank of Detroit, The desired information 
would have to be requested, via a subpoena, through the Cashier of 
the National Bank of Detroit. 

10. Top 20 stock holdings: 



June 30, 1975 



Market 
value i 



Outstanding 

shares held 

by NBDi 



Percent of 

total 

outstanding 

shares held 

by NBDi 



General Motors 2 __ $732,907,000 $15,470,334 

Dow Chemical... 203,665,000 2,269,251 

I.B.M 166,625,000 797,247 

Kresge 147,556,000 4,593,198 

Eastman Kodak.... 109,603,000 1,061,530 

Chrysler*. 100,764,000 8,142,518 

Exxon 90,767,000 987,936 

Minnesota Mining & Mfg. 87,743,000 1,304.735 

American Express 87,429,000 2,009,868 

Georgia Pacific 82,336,000 1,819,579 

Monsanto. 80,733,000 1, 117,413 

Mobil Oil 80,671,000 1,698,337 

Abbott Laboratories. 80, 598, 000 1, 057, 022 

Merck & Co 75,785,000 891,591 

Caterpiller Tractor.. 67,959,000 1,016,208 

Johnson & Johnson.. 65,837,000 676,123 

Texaco 64,564,000 2,413,608 

American Cyanamid 62, 132,000 2,249, 107 

Armstrong Cork 56,172,000 2,042,607 

Standard Oil-Indiana 55,438,000 1,122,802 



5.41 
2.31 

.54 
3.92 

.66 
13.67 

.44 



14 
£3 
2', 
32 
64 
76 
20 
1.78 
1.17 



4.71 

7.88 

.76 



1 Includes shares of common stock held by NBD for which we have no investment responsibility. 
■ Includes thrift plan holdings for General Motors and Chrysler employees. 

Notes: Total assets managed— $6,876,853,000. Total holdings of 20 common stocks— $2,499,284,000. Total holdings cf 
common stocks as a percent of total assets managed (June 30, 1975) 36.34. 

11. Inasmuch as the Trust Division has always applied the prudent 
man rule in fiduciary relationships, enactment of ERISA has not 



30 

altered the quality standards we customarily apply to equity selection 
in the employee benefit account sector. In view of higher inllat ion rates 
in recent years than the U.S. has experienced historically, however, 
accompnaied by higher long-term interest rates, we have modestly in- 
creasea our targeted exposure to fixed-income securities in discretion- 
ary pension funds during the past year or so. Nevertheless, the Trust 
Division continues to favor equities over fixed income securities in 
these accounts by a wide margin. Over the past decade, our equity 
exposure in pension funds has not changed appreciably. 

There has been no change in diversifical ion of common stock invesl - 
ments. 

Response of the Wilmington Trust Co. 

1. As of December 31, 1974, the most recent date for which the 

in formation is readily available, the total dollar amount of assets 
under our investment management was approximately $4,550,643,000. 
± As of December 31, L974, tin 1 most recent date for which the infor- 
mation is readily available, the total dollar amount of assets over 
which we exercise complete investment discretion was approximately 
$2,896,000,000. 

3. As of December 31, 1074. the most recent date for which the 
information is readily available, the dollar amount of the employee 
benefit funds under our management was approximately $1,775,746,000. 

4. As of December 31, 1974. the most recent date for which the 
information is readily available, the dollar amount of the employee 
benefit funds over which we exercise complete investment discretion 
was approximately $3:).000.000. 

5. As of December 31. 1974. the most recent date for which the 
information is readily available, approximately 65.2 percent of the 
employee benefit funds under our management were invested in com- 
mon stocks. 

6. (a) As of December 31. 1974, the most recent date for which the 
information is readily available, there was no instance where four 
percent of our aggregate discretionary employee benefit funds were 
invested in one security. 

(b) As of December 31, 1974, the most recent date for which the 
information is readily available, there was only one instance where 
more than four percent of the total assets over which we exercised 
complete investment diseVetion were invested in one security. That 
security was Christiana Securities Company common stock and the 
investment represented approximately 6.3 percent of the total assets 
over which we exercise complete investment discretion. 

7. (a) As of December 31. 1974. the most recent date for which the 
information is readily available, there was no instance in which our 
aggregate discretionary employee benefit holdings amounted to more 
than 8 percent of the company's outstanding shares. 

(b) As of December 31, 1974. the most recent date for which the 
information is readily available, there was only one instance in which 
the total assets over which we exercised complete investment discretion 
amounted to more than 8 percent of the company's outstanding shares. 



31 

That security was Christiana Securities Company common stock and 
the investment represented approximately 16.7 percent of Christiana 
Securities Company's outstanding shares of common stock. 

8. Three people are both an officer or director of Christiana Secu- 
rities Company and Wilmington Trust Company. They and their pri- 
mary business affiliations are as follow- : 

1. Lammot du P. Copeland. Director, E. T. chi Pont do Nemours & 
Company, Vice President, Christiana Securities Company. 

2. Irenee du Pont. Jr.. Senior Vice President, E. I. du Pont de 
Nemours & Company; President, Christiana Securities Company. 

3. George P. Edmonds, Honorary Chairman of Board, Wilmington 
Trust Company. 

9. There is a commercial relationship between Christiana Securities 
Company and Wilmington Trust Company, namely that company 
maintains a demand deposit account having a daily average balance 
during 1975 to date in excess of $100,000. 

10. We respectfully decline to divulge this information inasmuch as 
it is contrary to our established policy. 

11. (a) This question is inapplicable inasmuch as we make no ven- 
ture capital investments. 

(b) and (c) Generally, we have diversified somewhat more and have 
increased the proportion in fixed income securities. 



WILMINGTON TRUST C0.-TRUST DEPARTMENT REPORT FOR 1974 







Market value (omit cents) 








Trusts and estates 




Agencies 




Assets 


Employee 
benefit 

(1) 


Personal trusts 
(2) 


Estates 
(3) 


Employee 
benefit 

(4) 


All others 
(5) 


Total 
(5) 


US Government and agency 
obligations 

State, county, and municipal 
obligations... 

Other obligations 


30, 709, 000 

~583~764,"666~ 
, 157, 408, 000 
621, 000 
212,000 


71,908,000 

229, 059, 000 

65, 307, 000 

1, 755, 190, 000 

7, 807, 000 

2, 479, 000 

5, 173, 000 

18, 000 

238, 000 

100, 000 

10, 974, 000 


3,330,000 . 

1, 960, 000 

1, 303, 000 . 

14, 276, 000 . 

153,000 . 

11,000 . 

573,000 . 

27, 000 . 

77,000 . 

42, 000 . 

1,044,000 . 




142, 844, 000 

218,812,000 
53,017,000 

164, 806, 000 
7, 297, 000 
3, 427, 000 


248,791,000 


686, 000 


450,517,000 
703, 391, 000 






3, 091, 680, 000 


Preferred stocks 




15, 878, 000 


Real estate mortgages 

Real estate.. .. 




6, 129, 000 
5,746,000 


Savings and loan association 
accounts 








45, 000 


Time deposits, own bank .. 


127, 000 




14, 000 


456, 000 


Time deposits, other banks . . 




142, 000 


Demand deposits, own bank.. 


1,217,000 




772, 000 


14,007,000 


Demand deposits, other 
banks 






Miscellaneous 


1, 688, 000 


9, 494, 000 


2,254,000 . 




425, 000 


13,861,000 








Total assets 1 

Total number of 
accounts. 


, 775, 746, 000 
349 


2, 157, 747, 000 
3,755 


25, 050, 000 
154 


686, 000 
2 


591,414,000 
147 


4, 550, 643, 000 
4,407 



Note: Supplemental information— For the market value of common stock (only) shown in col. 6, indicate approximately 
when the market value was determined (in percentage distribution) Date— Dec. 31, 100. Dec. 1-30 . October, 

November . July, August, September .-Total should not exceed 100 percent. 

Return form to: Federal Deposit Insurance Corp., Division of Research, Applied & Statistical Research Unit. 550 Seven- 
teenth Street, N.W., Washington, D.C. 



32 

Response of the Northern Trust Company of Chicago 

1. Ufi* 00. 

2. $2,081,282,000 (sole discretion). 

3. $1,088,938,000, 

I. $T28#10,91« (as of September 17, 1975). 
5. 61.6 percent. 

8. (a) Discretionary employee benefit funds: $728,210.91C.. We do 
not have 4 percent of the above funds invested in one security. 

(b) Total assets over which we exercise discretion: [sole responsi- 
bility) $8,081,282,000. We do not nave 1 percent of this amount in- 
vested in any one security in sole accounts. 

7. (a) We do not hold more than 8 percent of any company's out- 
standing shares in aggregate discretionary employee benefit funds. 

( b ) We do not hold more than 8 percent of any company's outstand- 
ing snares among assets over which we have investment discretion. 

v . Not applicable. See question 7. 

9. Not applicable. See question 7. 

10. Total assets under management. $4^83,324,000. 



1. IBM. . 

2. American Express 

3. Eastman Kodak 

4. Exxon 

5. Sears Roebuck 

6. Minnesota Mining & Manufacturing, 

7. General Electric 

8. American Telephone & Telegraph 

9. Standard Oil of Indinia 

10. J. P. Morgan.... 

11. Continental Oil.... 

12. Dow Chemical.. 

13. Phillips Petroleum 

14. Weyerhaeuser 

15. Caterpillar. 

16. Union Carbide 

17. American Hospital. 

18. Motorola. 

19. Texaco. 

20. Monsanto.. 

Total 24.19 

1 Percent of shares outstanding as of September 25. Other data as of June 30, 1975. 

11. We concur as to the Atmosphere f concern caused by ERISA on 
matters pertaining to investment selection and diversification. In the 
State of Illinois, a Prudent Man Rule has existed for many years and 
fiduciary responsibility is not a new concept to any major trust de- 
partment in this State. Accordingly. ERISA, for us, has only served 
to make Federal Law out of what has been our State Law for some 
time. Therefore, because of ERISA, we have not altered the type of 
investment to be used in Employee Benefit funds nor have we made 
any significant changes in diversification procedures which have been 
practiced here long before the advent of ERISA. 

Specifically, our thinking and potential utilization of venture cap- 
ital companies as an investment would be guided solely by our analysis 
of quality. As a class, we do not exclude these companies as potential 
investments, but review them individually from a quality standpoint. 





Percent 


Percent 




shares 


assets under 


Total value 


outstanding 1 


management 


5152.493,296 


0.47 


3.06 


101.538,528 


3.08 


2.03 


94,239,983 


.56 


1.89 


92.931.015 


.44 


1.86 


86, 507, 245 


.74 


1.73 


77,495,607 


.97 


1.55 


74 647,004 


.77 


1.49 


46, 028, 353 


.16 


.92 


44,961,267 


1.27 


.90 


44,230,351 


1.53 


.88 


43, 962, 322 


1.19 


.88 


43, 570, 985 


.49 


.87 


43, 562, 126 


.87 


.87 


43,176,942 


.14 


.86 


40,030,271 


1.06 


.86 


38, 659, 836 


1.04 


.77 


37,284,272 


2.73 


.74 


35, 368, 292 


2.47 


.70 


33,458,659 


.44 


.67 


33, 065, 429 


1.14 


.66 



33 

Diversification of equities and diversification of types of investments 
has always been reviewed on a regular basis by our senior investment 
people and the impact of ERISA has only served to place these ques- 
tions in sharper focus here. 



Response of The First National Bank of Boston 



1. $6,265,533,530. 
•2. $5,038,742,061). 

3. $4,162,561,437. 

4. $3,883,253,564. 

5. 74.6 percent. 

6. No. 

7. a. Zayre, 8.89 percent : and b. Zayre, 8.93 percent. 

8. None'. 

9. Zayre: Average demand deposits, $200,000; line of credit, $12. 
000,000 (revolving) ; and loan, $6,500,000. 

10. Top 20 common stock holdings : 

LARGEST STOCKS (AS OF JUNE 30, 1975) 



Name 



Percentage of 

outstanding 

Market value shares 



Internationa! Business Machines Corp. 

Eastman Kodak Co 

Dow Chemical Co 

Exxon Corp 

Merck & Co., Inc 

Minnesota Mining & Manufacturing Co. 

Xerox Corp 

General Electric Co 

Procter & Gamble Co 

Citicorp 

American Home Products Corp 

Sears, Roebuck & Co 

Burroughs Corp 

Coca Cola Co... 

Eli Lilly & Co 

General Motors Corp 

American Telephone & Telegraph Co.. 

Hewlett Packard Co.. 

Digital Equipment Corp 

Texas Instruments, Inc 

Total.. 



$316,631,865 


1.0 


286,975,011 


1.7 


212, 837, 099 


2.5 


185, 090, 927 


.8 


176, 598, 125 


2.7 


174, 889, 946 


2.2 


165, 088, 976 


2.9 


153,461,814 


1.5 


143, 869, 010 


1.7 


141, 892, 597 


2.9 


130, 590, 952 


1.9 


129, 769, 630 


1.1 


112,588,396 


2.6 


94, 052, 618 


1.7 


85, 642, 948 


1.5 


80, 277, 746 


.5 


67, 027, 303 


.2 


63, 446, 213 


1.9 


61,815,859 


4.3 


60, 958, 841 


2.3 


. 2.843.505.876 



Note: These 20 holdings represent 45.4 percent of total assets. 



11. a. We do not do venture capital deals. 

b. We are urging greater diversification of equities in account 
review meetings — nothing formalized and no data. 

c. We have put a 6 percent ceiling on individual investments. 



Response of the Continental Bank 

1. $5,800,000,000 as of December 31, 1974. 

2. $2,400,000,000, full investment discretion. 

3. $2,700,000,000. 



34 

►,000, full investment discretion, 
57 percent. 

6. (a) I BM, 4.7 percent : (b) IBM, 4.7 percent; Texaco, L5 percent; 
and American i Ionic J 'rod. 4.4 percent. 

7. (a) None. (l>) Victor Comptometer Corp., 25 percent and North- 
western Steel and Wire Co., S3 percent. 

B. Victor Comptometer Corp., Edward M. Cummings and James 
M. Termondt : and Northwestern Steel & Wire, George II. Norton. Jr. 

9. Due to the sensitive nature of any information coming into the 
Trust Department concerning a commercial banking relationship, we 
do not have access to the information asked for by this question. 

10. These stock holdings amount to 20 percent of total assets 
managed. 

Percentage of 

total outstanding 

Company Millions shares 

International Business Machines $110. 8 0.45 

Texaco 

American Home Products 

Eastman Kodak.. 

Standard Oil (Indiana) 

Exxon. 

Merck 

Procter & Gamble 

Minnesota Mining & Manufacturing 

Sears, Roebuck 

Citicorp 

Burroughs 

Halliburton.. 

Eli Lilly 

Philip Morris 

General Electric. 

Xerox... 

Johnson & Johnson.. 

J. C. Penney 

Caterpillar Tractor 

11. 

Exhibit . B 

The definition of venture capital investments is necessarily impre- 
cise but we regard securities of relatively small companies, for 
example, capitalizations less than $50 million, especially when the 
class of security is relatively illiquid, as venture capital opportuni- 
ties. For reasons related to our judgements of securities markets, we 
de-emphasized investments of this type in employee benefit accounts 
several years prior to the enactment of ERISA. It is possible that our 
market judgements would change to the extent that we felt that this 
type of investment was attractive and. in that event, it is further 
possible that the existence of EEISA would cause us to approach the 
theory with somewhat more reluctance in the future. However, to 
date our inactivity in "venture capital investments" has been more a 
function of market and economic judgements than it has been inter- 
pretations of ERISA. 

Wo fool that we have long practiced prudent diversification with 
regard to both equity investments and types of investments in em- 
ployee benefit plans. Therefore, we feel that the new pension law has 
had little if any impact on our practices with regard to diversification. 



107.5 


1.88 


103.9 


2.02 


88.7 


.87 


77.4 


1.25 


69.3 


.48 


68.0 


1.39 


53.6 


.79 


52.4 


.98 


52.3 


.69 


48.4 


1.40 


46.8 


1.58 


45.3 


1.72 


44.2 


.54 


42.1 


1.58 


42.0 


.70 


36.9 


.90 


33.1 


.71 


31.0 


1.46 


27.0 


.96 



35 

Response of the Chemical Bank 

Chemical Bank. 
New York, N.Y., October 9, 1975. 
Hon. Lloyd Bentsen, 
Chairman, Subcommittee on Financial Markets, Committee on 

Finance, U.S. Senate, Washington, B.C. 
Dear Senator Bentsen : This is in reply to your letter of Septem- 
ber 8. 1975 with which you enclosed your Bank Trust Questionnaire 
containing eleven questions. Our answer- to the questions follow: 

1. Approximately $6 billion. 

2. Approximately $4.7 billion. 

3. Approximately $3.4 billion. 

4. Approximately $2.3 billion. 

5. Approximately 61.6%. 

I feel that some comments with respect to our answers to the first 
five questions are in order. First, our computer system is programed 
to give us what we consider to be accurate data with respect to our 
equity position as of June 30. 1975. However, information with respect 
to non-equity holdings is not readily available as of June 30th. Ac- 
cordingly, to arrive at the above figures, we have used our equity posi- 
tion as of June 30 and combined it with an estimate of our non-equity 
assets as of the same date. 

Second, with respect to questions 2 and 4. we have interpreted the 
phrase "exercise investment discretion" to include all accounts for 
which we render investment advice, including those in which an out- 
side party's approval must be obtained before a transaction can be 
completed. In other words, these figures exclude only directed accounts, 
but include accounts where we act with a co-fiduciary or where we 
render investment advice on a non-discretionary basis. 

6. (a) No. 

(b) IBM, 7.4 percent. 

7. (a) No. 

(b) New York Merchandise Co. Com.. 10.81 percent: Troy Mills, 
Inc. Com.. 8.81 percent ; Houston Terminal Warehouse & Cold Storage. 
Class A Com.. 8.04 percent; Essex Co. Com., 9.40 percent; and Ken- 
tucky Ohio Gas Co. Com.. 21.67 percent. 

All of the stocks listed were received as a part of an estate where the 
Bank acts as sole executor. Under the terms of the Will, the residuary 
estate is to be held in a perpetual trust for a charity and the Bank was 
directed to hold all of the testator's common stocks in perpetuity. We 
are attempting to obtain a Court's construction of the Will's provisions 
in this respect. In addition, we hold a limited number of other common 
stocks representing more than 8 percent of the outstanding shares. 
These stocks are not being reported as we do not have complete invest- 
ment discretion, and for the most part, they consist of family com- 
panies held in Personal Trust or Estate accounts where, we feel, dis- 
closure of the holdings would violate our duty of confidentiality to our 
customers. In no case were any of these stocks purchased by the Bank. 

8. None. 

9. We do not have access to information of this type in the Trust 
Department, so that we are unable to reply to this question. 



36 



10. Top 20 common stock holdings : 



Percentage of 
Rank Market value outstanding 

No. Security description (thousands) shares 

1 International Business Machines Corp $394,212 1.269 

2 ExxonCorp... 162,198 .780 

3 Eastman Kodak Co. 81,935 .493 

4 American Telephone & Telegraph Co 69,942 .243 

5 Standard Oil Co. of Indiana 66,405 .924 

6 General Electric Co 63,162 .652 

7 XeroxCorp 62,331 1.124 

8 Atlantic Richfield Co. 62,306 1.274 

9 Minnesota Mining & Manufacturing Co 55,821 .729 

10 Union Carbide Corp 52,977 1.400 

11 Merck&Co 51,006 .796 

12 Ingersol Rand Co . 49.263 3.345 

13 Philip Morris, Inc 46,893 1.493 

14 Citicorp 44,060 .913 

15 Sears Roebuck & Co 42,881 .372 

16 Kerr-McGee Corp 42,654 1.818 

17 Allied Chemical Corp 41,265 3.798 

18 Caterpillar Tractor 39,369 1.027 

19 R.J. Reynolds Industries, Inc 38,850 1.454 

20 Burroughs Corp 36,225 .856 

Total... 1,503,805 

Top 20 percentage of total assets managed (approximately $6,000,- 

000,000 equals 100 percent). 25.1 



11. A number of factors, including the enactment of ERISA, have 
caused us to reduce substantially our investment of pension funds in 
venture capital situations. First, the generally poor results achieved on 
venture capital investments made during the late I960'.-, combined with 
the inability of small companh 5 to secure Second round" debt or equity 
financing in the public marketplace, lias resulted in our adopting in- 
vestment policies to discourage venture capital and private placement 
investments. Additionally, the decision of the New York Court of Ap- 
peals in The Bank of New York v. Spitzer in early 1975 rejecting the 
"total return" concept in evaluating the prudence of a trustee in making 
individual investments has discouraged investments in small and 
medium-sized companies, as well as venture capital and private place- 
ment situations. Finally, the prudent man rule and related fiduciary 
responsibility provisions of ERISA, combined with the overall direc- 
tions contained in ERISA regarding diversification, has consciously or 
subconciously. resulted in more diversification of our equity invest- 
ments with most portfolios now holding from 15-25% more stocks 
than they held pre-1975. In addition, larger percentages of our port- 
folios are now being invested in "cash equivalent*' securities, fixed in- 
come corporate and government securities, as well as real estate than 
ever before. While this diversification may be the result of the kinds of 
markets we have been operating in during the past 24 months and the 
suddenness of changes that occur today, obviously the provisions of 
ERISA would also appear to have contributed significantly to these 
changes in investment policies and strategies. 

During 1975 to date, we have made not investments in venture capi- 
tal situations or "restricted" securities, except in real estate through 
our Commingled Real Estate and Mortgage Fund and certain large 
pension funds directly. 



37 

We have publicly disclosed our holdings for the last two years and, 
as requested, enclose copies of our report s. 

We trust that this information will be helpful to you in yon;- study. 
Sincerely yours, 

TV. Pekry Nest. 



Response of the Cleveland Trust 

Cleveland Tei 
Cleveland, Ohio October 31 . !■>]■'■. 
Senator Lloyd Bf.xtm.x. 

Chairman, Subcommittee on Financial Markets, Committee on Fi- 
nance, U.S. Senate, Washington, D.C. 

Dkak Skxator Bentsex: In response to your letter of September 8, 
1975 which contained a "Bank Trust Quest ionnaire" of the same date 
The Cleveland Trust Company ds not a national bank and therefore 
not subject to the quarterly reporting requirements of the Comptroller 
of the Currency. However, I have enclosed a copy of our report to the 
Federal Reserve as of December 31, 1974 relating to our Trust Depa it - 
ment holdings. This information has also been published on page 71 
(copy enclosed) of Trust Assets of Insured Commercial Banks 2374, 
published by Board of Governors of the Federal Reserve System, Fed- 
eral Deposit Insurance Corporation, Office of the Comptroller of the 
Currency. 

The Bank Trust Questionnaire covers information that is (i) not 
available to the Trust Department; (id) considered confidential by the 
Trust Department; and (iii) not avialable from our current record 
keeping facilities without a substantial amount of personnel time, ef- 
fort and expense being devoted thereto. Accordingly, it is not possible 
for us to respond to your inquiry. 
Very truly yours, 

Joiix F. Milli.i:. 

Enclosure. 



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40 
Response of the Wells Fargo Bank, N.A. Trust Division 



1. $2,660,000,000 (estimated). 6. No. 

2. $1,460,000, » (estimated). 7. No. 

3. $750,000,000 (estimated). 8. X A. 

4. $600,000,000 (estimated). 9. N 

5. 70 percent (estimated ). L0. (a ) 
Issue : 

Market value as of Oct SO, / ." ? .7 

1. IBM $56,609,463 

2. Proctor & Gamble 54,009, 700 

•>. Exxon 40, 9;>7. 573 

4. Caterpillar Tractor 37,951,091 

5. AT&T 37,364,550 

6. Standard Oil-California 33,392,064 

7. Utah International 31, 733, L35 

8. General Motors 30, 686, 289 

9. General Electric 28, 537, 885 

10. Eastman Kodak £7,566,589 

11. Dow Chemical 27,095.248 

L2. St auffer Chemical 24,134,684 

la Phillips Petroleum 22, ODD. 54 1 

14. R. J. Reynolds 18, 215. 396 

15. Sears Roebuck 17, 780, OS) 

16. Standard Oil-Indiana 16, 750, 7:>1 

17. Wells Fargo 16, 872, 953 

18. Lucky Stores 15, 170, 826 

19. Union Carbide 14, 522, 771 

20. PG&E 13, 449,316 

(b) 21 percent of total assets managed. 

11. The Employment Retirement Income Security Act of 1971 hai 
not resulted in any change in venture capital investments within our 
organization. The only employee benefit plan investments of the ven- 
ture capital type were made several years ago. Since that date no 
sales or additional investments have been made that involve venture 
capital funds. While no specific change has occurred in our approach 
to venture capital activities, it is fair to state that ERISA tends to 
inhibit fiduciary institutions from undertaking venture capital Lnvesl - 
ments as well as commitments to purchase equity in small or medium 
size capitalization firms. 

Our policy with regard to diversification of equity investments lias 
not been modified as a result of ERISA. We maintained diversifica- 
tion levels above those of the industry before ERISA and our pic- 
existing diversification guidelines appear to satisfy the requirements 
of ERISA as we understand them. 

Similarly, our diversification of investment types and amounts has 
not been changed by the enactment of ERISA. We typically employ 
both fixed income and equity investments in employee benefit plans. 
Many of our portfolios currently include real estate investment as a 
part of the equity component along with common stock representa- 
tion. The fixed income component for the most part is composed of 
debt obligations although we employ mortgage investments in a few 
of our employee benefit portfolios. 



41 



M=|=W-J ! ! : 



2 

w 
■J 



A 



w 

5 



3! 



I 1 © 



^ 




!l 




- 


.- 






- 




r 


' 


' 






- 


1 

E 
O 


»i 




- 


* 


& 


- 



2 



Si 






42 



Number of accounts adi ' jst department: 

(a) Trusts and estates (except corporate trusts). . 

(b) Corporate accounts 

1. Trusts .... 

2. Registrar ... 

3. Transfer agent 

4. Others. 

(c) Agencies 

(d) Other.. 

Total accounts.. 



9. 781 


1,111 


270 


126 


98 


617 


2,619 


281 



13,792 



EMPLOYEE BENEHT ACCOUNTS i 



Held as trustee (1) 



Held as agent (5) 



Type cf account 



Number 



Amount 



Amount (mo' cate 

where market 

Number value not used #) 



Pension plans 622 662. 478, 000 8 18,855,000 

Profit sharing plans. 1.203 2C9, 892. 000 2 394,000 

Stock bonus plans 

Thr ft plans 112 9. SS9, 000 1 1,518,000 

If others (specify): 

Retirements 2 256,000 

Safekeeping 1 218,000 

Welfare 2 769, 000 

Union security 2 185, 000 

Totals: 2,037 942,359,000 18 22,195,000 



i Insured plans or portions of plans that are funded by insurance should be emitted. 
i Totals should equal totals in cols. (1) and (5) on the front of this report. 



Note: Total resources as of June call $11,714,906,576.28. 



Response of Girard Bank 

1. $3,364,000,000, managed assets (exclusive of custody) as defined 
by the Federal Res< we, June 30, 1975. 

'%. $1,014,583,000, an estimate of assets over which we exercise full 
investment discretion, June 30, 1975. 

3. $775,000,000, an i si imate of total employee benefit assets, Jum 30, 
1975. 

4. $630,000,000, an estimate of employee benefit assets over which we 
exercise full investment discrel ion, J une 30, L975. 

:>. 55 per. ••lit. estimated percent of total employee benefit assets (see 
question No. 3) invested in common stocks. 

6. a. Xo, there is no individual investment over which we have full 
discretion in the employee benefit area exceeding $25,200,000 (4 per- 
cent of question Xo. 4). 

b. No, there is no individual investment over which we have full 
discretion in the Trust Department exceeding S40,600,000 (4 percent 
of question No. 2). 

7. a. Xo, there are no instances in the employee benefit area where 
full discretion holdings exceed 8 percent of the company's outstanding 
shares. 

b. Yes, Emery, Ind., 16 percent. Emery Industries is the only Trust 
Department investment where we exercise full discretion over more 
than 8 percent of the company's outstanding shares. 

8. George H. Brown, Jr., director of Emery Industrie-, Girard 
Company and various other corporations including Phila. Elec. Co. 
and the Fidelity Mutual Life Insurance Co. 

9. Such information is not available to the trust department. 

10. Table represents amounts as of June 30, 1975. 



Holding 





Percent of 




Amount of 


managed 




managed 


assets 


Percent of 


holding (in 


(question 


outstanding 


thousands) 


No. 1) 


shares i 


$130,781 


3.9 


13.0 


105, 282 


3.1 
2.7 


.3 


89, 155 


.4 


62,038 


1.8 


.8 


52, 584 


1.6 
1.5 


4 8 


50, 864 


.2 


41,146 


1.2 
1.2 


5 1 


40, 190 


.2 


39, 634 


1.2 


32.0 


36, 543 


1.1 


.3 


36, 233 


1.1 


.8 


32, 841 


1.0 


.4 


31, 208 


.9 


1.4 


30, 490 


.9 


.5 


29, 950 


.9 


36.4 


29, 397 


.9 


.4 


28, 875 


.9 


.3 


28,753 


.9 


.6 


28, 360 


.8 


.4 


27, 352 


.8 


2.5 


28.4 



Rohm & Haas 

IBM. 

Exxon 

Proctor & Gamble. 
Campbell Soup... 

A.T. &T 

SmithKline Corp.. 
Eastman Kodak... 

Weis Markets 

General Motors... 
Atlantic Richfield.. 
General Electric... 

Pfizer, Inc 

Merck &Co 

Emery Industries.. 

Texaco 

Sears, Roebuck... 

CitiCorp. 

Minnesota Mining 
Continental Corp.. 

Total 



i As these figures represent situations in which we have varying degrees of investment discretion, we felt it would be 
pertinent to show a further breakdown of those holdings in excess of 1 percent. 



0.7 


99.1 


0.2 


13.0 


.2 


99.3 


.5 


4.8 


10.5 


89.2 


.3 


5.1 





100.0 





32.0 


44.0 


55.0 





1.4 


44.4 


41.0 


14.6 


36.4 


8.4 


89.8 


1.8 


2.5 



44 



Percent Percent Percent Total 

full shared advisory percent of 

Holding authority authority authority outstanding 

Rohm & Hass 

Campbell Soup 

SmithKlme Corp 

Weis Markets 

Pfizer, Inc 

Emery Ind 

Continental Corp 

11. a. We presently plan no venture capita] investments under 
ERISA although it should be noted we have never made more than a 
nominal commitment to the area, 

1). There i- a tendency toward greater diversification although we 

haw historically limited individual portfolios to a 3 to 5 percent 

investment in a single security when circumstances would permit. No 
other specific data i.- available* 

C. A tendency toward a higher percentage of fixed income securities, 
particularly with new money. No other specific data is available. 



Response of the Security Pacific National Bank 

1. S2.sO2.OO0.00O. this figure includes only those accounts for which 
we have full or shared investment responsibility. It also includes some 
accounts in which we do not have custody of the assets. Total assets 
in our custody amounted to $5,608,400,000 when last valued on or prior 
to June 30. 1975. 

2. S2.S02,000,000, see response to question #1 above. The dollar 
amount of assets managed over which we have sole, unshared invest- 
ment discretion was si. 478.600,000. 

3. $312,800,000. this figure includes only those employee benefit 
accounts for which we have full or shared investment responsi- 
bility. Total emplovee benefit funds in our custody amounted to 
$1,144,200,000 when "last valued on or prior to June 30, 1975. 

4. $312,800,000. this figure excludes public retirement systems for 
which we act as investment advisor. 

5. 57.0 percent, of those employee benefit accounts for which we 
have full or shared investment responsibility, common stocks repre- 
sent 57.0 percent of the total funds. In respect to total employee bene- 
fit funds in our custody, common stocks represent 62.5 percent of the 
total funds. These figures exclude public retirement systems for which 
we act as investment advisor. 

6. (a) No; and (b) No. 

7. (a) No. 

(b) No, it is assumed that inquiry relates to publicly held stock 
and not to closely held stock. 

8. Not applicable. 
!). Not applicable. 



45 



10. Top 20 common stock holdings : 



20 LARGEST STOCK HOLDINGS, JUNE 30, 1975 
[Dollars in thousands] 



$190,870 


6.81 


13.83 


120,454 


4.30 


.39 


100,676 


3.59 


7.13 


65, 940 


2.35 


.40 


59,418 


2.12 


.21 


52,221 


1.86 


.03 


37,233 


1.33 


.05 


36, 392 


1.30 


.04 


36,070 


1.29 


.03 


35, 096 


1.25 


.42 


34, 122 


1.22 


.42 


32,783 


1.17 


.05 


32,681 


1.16 


.03 


32,287 


1.15 


.60 


30, 456 


1.09 


5.57 


29,725 


1.06 


.62 


27,363 


.98 


.43 


27. 1C3 


.97 


.86 


25, 867 


.92 


.53 


24, 360 


.87 


.35 



Percent of 

Percenfof outstanding 

Common stock Market value assets managed shares held 

1. AMP, Inc.' . 

2. International Business Machines... 

3. Union Oil Co.' 

4. Eastman Kodak Co 

5. American Telephone & Telegraph Co 

6. Exxon Corp 

7. Standard Oil Co. ot Indiana. 

8. General Electric Co 

9. Sears, Roebuck & Co 

10. Dow Chemical Co 

11. Procter & Gamble Co 

12. American Home Products Corp 

13. General Motors Corp 

14. Standard Oil Co of California 

15. Dart Industries, Inc. 1 

16. Citicorp 

17. Merck & Co., Inc 

18. Schering-Plough Corp.J 

19. Atlantic Richfield Co 

20. Burroughs Corp 

i Investment authority restricted with respect to all or majority of shares held. 

11. The new pension legislation has not had a significant effect upon 
our investment process or decisions, which we continue to make as 
prudent fiduciaries as we have in the past. We continue to avoid 
venture capital situations for fiduciary accounts and we remain broadly 
diversified in our equity investments. The diversification of the types 
and amounts of our investments remains substantially the same as 
before ERISA. 

Response of the Crocker National Bank 

1. The book value of assets held in the Trust and Investment Divi- 
sion of Crocker National Bank as of June 30, 1975 was $5,854,040,000. 
We assume that "investment management" includes trust accounts of 
all types. 

2. $3,036,585,014. 

3. The book value of all employee benefit funds as of June 30, 1975 
was $1,443,396,000. 

4. $1,205,179,743. 

5. 69.4 percent. 

6. Yes, Standard Oil Company of California. The bank is trustee 
of that Company's Employee Stock Plan. Our investment discretion 
is limited to the temporary investment of cash reserves awaiting 
permanent investment in the Company's stock. The holding represents 
32.4 percent of (a) and 7.8 percent of (b). 

7. No. 

8. Not applicable. 

9. Not applicable. 



46 
LO. Top 20 commoD stock holdings: 



Eastman Kodak Corp 

International Business Machines 

Hewlett Packard Co 

Exxon Corp 

Dow Chemical Corp. 

Procter & Gamble Co 

Standard Oil Co. of California 

American Home Products Corp 

General Electric Co 

General Motors Corp 

Caterpillar Tractor Co 

American Telephone & Telegraph 

Minnesota Mining & Manufacturing Co. 

Safeway Stores, Inc 

Pacific Gas & Electric Co... 

Bankamerica Corp 

Crocker National Corp 

Sears, Roebuck & Co 

Chicago Bridge & Iron Co... 

DuPont (E. I.) de Nemours & Co 

Total 





Percent of 


Amount of 


outstanding 


holding 


shares 


565, 487, 877 


0.46 


55, 866, 656 


.21 


39,181,905 


1.59 


35, 834, 263 


.18 


34,125,157 


.42 


31,424,607 


.47 


30, 646, 636 


.62 


26, 468, 780 


.51 


22,069,516 


.28 


21,782,197 


.16 


21,349,696 


.58 


20, 533, 388 


.08 


18,874,669 


.33 


14,596,824 


1.28 


14,581,997 


.92 


14,003,211 


.55 


13,731,196 


5.67 


13,691,940 


.14 


13,602,054 


1.73 


13,255,751 


.23 


521,108,320 ... 





Note: 17.2 percent of total assets managed. 

11. Since the enactment of the Employee Retirement Income 
Security Act of 1974, we have made no investments in venture capital 
situations. Even prior to 1970. our interest in venture capital was very 
Limited. Two venture capital funds were purchased in 1970-71 for two 
of our largest accounts. Together they represent about 3% of each 
account. It has always been our position that individual venture eapi- 
lal investments involved more risk than was prudent for employee 
benefit plans. 

From time to time, we have purchased the equities of small to 
medium-sized companies. These companies are carefully screened. 
and the prudent man rule is one of many factors considered. Com- 
panies with sales of less than 50 million are generally not considered, 
and those with revenues of $100 million plus are preferred. Market 
capitalization of $25 million is a minimum and $100 million plus is 
typical. The equity investments of our portfolios have always been 
diversified. Most accounts contain 30-50 individual equity issues. 

Likewise, we have diversified the accounts by types of investments. 
For most of 1973 and 1974, our accounts Avere invested about 20% 
cash and equivalents, 40% bonds and 40 r r common stocks. Presently, 
we are about 5% cash and equivalents. 40% bonds and <>V'c common 
stocks. In many of the larger accounts, real estate mortgages have 
been included as fixed-income investments along with bonds. As an 
additional diversification measure, we are considering the purchase of 
real estate equities. 

In summary, it is fair to say that ERISA has not affected our prac- 
tices with regard to diversification of equities or diversification of 
types or amounts of investments. However, our screens for small and 
medium-sized companies have been expanded, and it is more diffi- 
cult for these companies to be considered for use. 



47 
Response of the Wachovia Bank and Trust Co. 

1. $2,744,ai7,153.67. 

2. $2,367,487,925.96. 

3. $1,028,104,302.50. 

I, $654,865,427.53. 

5. 48.2 percent. 

6. a. Xo: b. Xo. 

7. a. Xo. 

b. Chatham Manufacturing Company, 44.27 percent; Henredon 
Furniture Industries Inc., 15.88 percent; and llanos Corp, 13.44 per- 
cent. 

8. Chatham Manufacturing Company, A. K. Davis, Retired Chair- 
man of the Board. Wachovia Bank & Trust Company, X.A. 

Hanes Corporation, Gordon JIanes. Chairman of the Board. llanos 
Corporation; John (r. Medlin Jr., President and Chief Operating 
Officer, Wachovia Bank & Trust Company, X.A.: and William S. 
Smith, Vice Chairman, R. J. Reynolds Industries, Inc. 

9. Not available at present time. 

10. Top 20 common stock holdings : 

Percent 

total Percent of 

assets outstanding 

Description Amount managed shares • 

R. J. Reynolds Industries, Inc $162, 356, 610 

Burlington Industries, Inc 87,773,604 

International Business Machine Corp 54,699,300 

Halliburton Co 43,592,512 

Exxon Corp 31,622,958 

Atlantic Richfield Co 27,360,466 

Marsh & McLennan Cos 26, 755, 740 

Phillips Petroleum Co... 26,413,464 

Blue Bell, Inc. 26,382,372 

General Electric Co 26,326,707 

Eastman Kodak Co... 23,856,350 

Eaton Corp 22,702,329 

Wachovia Corp 21,190,753 

Duke Power Co. 20,120,096 

NCR Corp 19,387,645 

Abbott Laboratories 19,317,343 

American Telephone & Telegraph Co 18, 942, 464 

Emerson Electric Co 17, 516,961 

ARA Services, Inc.... 15,023,193 

Xerox Corp... 15,012,246 

1 Including convertible preferred. 

II. a. Because of ERISA, we feel it is no longer appropriate to 
make venture capital investments in a retirement fund. While our 
investments in this area had been minimal prior to enactment of 
ERISA, we now believe that no investments of this type are ap- 
propriate. 

b. Clearly, ERISA calls for diversified portfolios. This provision 
has had very little or no impact on our investment structure in that 
our portfolios have always been diversified, and we have felt it im- 
portant to avoid concentration in a very small number of equities. 

c. Our investment poliey has always called for a reasonable balance 
among types of investments in our retirement fund portfolios. ERISA 
by itself has not had a great deal of impact on the diversification of 
types of investments: however, we have established limits for equity 
investments which are lower than they might have otherwise been. It 
clearly does not seem appropriate to have a retirement fund which is 
almost entirely invested in equities. 



5.9 


5.8 


3.2 


13.4 


2.0 


.2 


1.6 


1.4 


1.2 


.2 


1.0 


.5 


1.0 


4.0 


1.0 


.6 


1.0 


15.6 


1.0 


.3 


.9 


.2 


.8 


4.7 


.8 


7.9 


.7 


2.4 


.7 


2.8 


.7 


2.0 


.7 


.1 


.6 


1.0 


.5 


1.9 


.5 


.4 



48 
Response of the Irving Trust Co. 

1. The estimated total market value of assets in accounts over which 
zeroised any degree of investment supervisory responsibility as 

of December 31, 1974 was $1,688,042,000. 

2. The estimated total market value of assets in accounts over which 
we exercised sole investment discretion as of December 31, 1974 was 

,275,000. 
:». The estimated total market value of employee benefit fund- over 
which we exercised any degree of investment supervisory responsi- 
bility as of December 31, 1974 was $826,742,000. 

4. The estimated total market value of employee benefit fund- over 
which we exercised sole investment discretion as of December 31 ? 
L974 was $680,401,000. 

5. On December 31, 1974 approximately 52 percent of the employee 
benefit funds over which we exercised any degree of investment super- 
visory responsibility was invested in common stocks. 

6. On December 31. 1974 no single security represented more than 
4 percent of the total market value of (a) all accounts over which we 
exercised sole investment discretion or (b) all employee benefit ac- 
counts over which we exercised sole investment discretion. 

7. On December 31. 1974 we held approximately 18 percent of the 
outstanding common shares of ICM Realty (an American Stock Ex- 
change listed real estate investment trust) in various accounts over 
which we exercise sole investment discretion. In no other case did we 
hold more than 8% of the outstanding shares of any company. 

8. We know of no person who is an officer or director of ICM Eealty 
and also an officer or director of Irving Trust Company. 

9. This question has been referred to and will be answered inde- 
pendently by our general counsel in view of long-standing company 
policies governing the relationship and controlling the exchange of 
information between our commercial and trust activities. 

10. Indicated below as of December 31, 1974 are the top 20 stocks 
held in accounts over which we exercised any degree of investment 
supervisory responsibility, the approximate market vaue of each issue 
and the percentage of outstanding shares held of each issue : 



Issue 



Percentage of 
Approximate outstanding 

market value shares 



International Business Machines Corp $69,249,000 

Avon Products, Inc.. 52,383,000 

Schlumberger, Ltd 25,744,000 

Fastman Kodak Co _ 22,950,000 

Genera! Electric Co. 18,723,000 

Ocean Drilling & Exploration Co. 18,445,000 

Schering-Plough Corp... 18.179.000 

Merck & Co., Inc 16,859.000 

American Telephone & Telegraph Co 15,399,000 

Exxon Core 13.617,000 

Baxter Laboratories, Inc 12,665,000 

Weverhaeuser Co 12,395,000 

Dow Chemical Co 12,369.000 

Lowe's Cos., Inc.. 12,183.000 

Johnson & Johnson 11,913,000 

Procter & Gamble Co 11,847,000 

Minnesota Mining & Manufacturing Co 11,772,000 

Betz Laboratories, Inc 11,014,000 

American Home Products Corp _ 11,012,000 

Atlantic Richfield Co 10,664,000 



0.3 

3.1 
.6 
.2 
.3 

4.3 
.6 
.3 
.1 
.1 

1.2 
.4 
.2 

5.1 
.3 
.2 
.2 

4.8 
.2 
.3 



49 

The total market value of these issues represents approximately 
23.1 percent of the total market value of assets held in accounts oyer 
which we exercise any degree of investment supervisory responsibility. 

11. (a) We have not made venture capital investments with pen- 
sion fund monies under our management. However, we do maintain 
two pooled funds devoted in one case to the stocks of small to me- 
dium size companies and in the other to private placements, generally 
ones with equity features. The character of these funds has not 
changed since ERISA nor has our inclination to use them diminished. 
It should be noted, however, that these pooled funds are quite small 
and at no time has their aggregate value exceeded 5% of the employee 
benefit funds under our management. 

(b) It has long been our policy to diversify pension trust invest- 
ments broadly. ERISA has had no particular impact on our invest- 
ment strategy either in terms of predisposing us to purchase fewer 
stocks or to change the character of our equity selections. Recognizing 
that size is not an exclusive measure of a company's financial strength 
or earnings potential, we have in the past and will continue to buy the 
shares of small to medium size companies which we deem to be of 
appropriate quality. 

(c) Though ERISA has had no discernible impact on our invest- 
ment strategy, we have been influenced by the troubled state of the 
U.S. economy and capital markets to buy somewhat fewer stocks 
over the last year and we have changed our industry emphasis 
slightly. Following is a scheme derived from a composite of pension 
funds under our management, as of year-end in each case, over the 
last three years : 

(In percent] 





1972 


1973 


1974 


Temporary investments (commercial paper, bank certificates of deposit, 
U.S. Treasury bills) 


7.4 
13.2 
79.5 


10.2 

14.2 
75.6 


16.1 


Fixed income investments 

Equities 


32.2 
51.6 







Perhaps it should be noted that the average maturity of our com- 
posite bond portfolio has been shortened substantially during the 
past three years and emphasis has been placed on upgrading the 
quality of our holdings. 

Industry emphasis in our composite stock portfolio has shifted 
somewhat over the past few years as indicated by the following data 
with respect to selected industries : 

[In percentl 

1972 1973 1974 

Amusement and leisure time 

Banking and financial 

Building material and equipment 

Chemicals 

Drugs 

Electrical and electronics 

Environmental control 

Food and allied products 

Hospital supply 



7.59 


3.37 


2.7 


1.42 


1.12 


.8 


5.69 


5.59 


3.7 


2.15 


3.92 


7.3 


4.72 


5.25 


6.7 


7.09 


3.91 


2.7 


3.30 


3.23 


2.5 


7.65 


3.24 


3.5 


9.26 


9.77 


9.9 



50 

[In percent] 



1972 1973 1974 



Household products 

Insurance 

Machinery 

Metals 

Multi-industry 

Office equipment 

Paper and forest products. 

Petroleum _, 

Petroleum supply... 

Real estate 

Retail trade. 

Transportation— Airlines.. 
Transportation— General.. 
Utilities 



4.65 


4.57 


4.8 


3.21 


4.71 


4.8. 


1.66 


3.74 


3.9 


.26 


1.73 


.9 


5.62 


6.72 


3.5 


10.97 


11.44 


11.8 


.74 


1.64 


4.3 


4.39 


9.75 


1.9 


2.92 


3.68 


11.4 


2.42 


1.60 


1.2 


8.41 


4.64 


5.4 


.15 


.94 





1.14 


2.72 


1.7 


.13 


.72 


.7 



Response of the United California Bank 

1. $1.9:)4,182.s72 at market as of June 30, 1975 (we have inter- 
preted this question to mean assets for which we have some degree of 
investment discretion, either alone or shared with others, such as Co- 
Trustees. Consultants or Committees.) 

2. $1,451,570,484 (we have interpreted "investment discretion^ as 
used in this question as intended to mean that investment authority, to 
the extent granted under the controlling trust instrument, is rested 
solely in us. As was the case in the 1973 questionnaire, there i> a ques- 
tion as to the precise meaning of terms such as "investment manage- 
ment", "management" and "investment discretion*' for purposes of the 
quest ionnaire. Such terms standing alone have no universally standard 
meaning;) 

•'». si 175, C>82.940 (as in question Xo. 1. we have interpreted this ques- 
tion to mean assets for which we have some degree of investment 
discretion, either alone or shared with others.) 

4. $921,433,711 (see comment under question Xo. 2 above.) 

5. 40 percent, as applied to the amount listed in answer to question 3. 
G. (a) Rockwell International Corp., 11 percent: and Southern Cali- 
fornia Edison, 5 percent. 

(b) Rockwell Intel-national Corp.. 7 percent. 

See comments to question Xo. 10 below T as to circumstances under 
which all but a nominal amount of the Eockwell and Southern Cali- 
fornia Edison securities ale held. 

7. (a) Xo (excepting Rockwell International Corp. and Pacific 
Lighting Corp. security holdings as not coming within the purview of 
investment discretion for purposes of this question — (see comments to 
question 10.) 

(b) IT. F. Ahmanson & Co.. 11 percent (all received into a group 
of companion trusts.) Holdings of more than 8 in percent closely held, 
smaller corporations received by us mainly in probate estates have 
not been considered to come within the purview of this question. 

8. None. 

9. IT. F. Ahmanson &Co. demand deposits : 1974, $148,000 : and 1975. 
$117,000. 

10. Please list the top twenty common stock holdings in your total 
portfolio.* the dollar amount of each of these holdings, the percentage 
of your total assets managed that these 20 holdings represent and the 



51 

percentage of outstanding shares in each of these companies your 
holdings represent ? 

TOP 20 COMMON STOCK HOLDINGS 

Market value, Total percentage 
June 30, 1975 outstanding 

1. Rockwell International Corp i $99, 382, 336 0.14 

2. Southern California Edison Co > 48,478,225 .05 

3. Pacific Lighting Corp 136,852,835 .11 

4. H. F. Ahmanson & Co 2 26,547,500 .11 

5. Walt Disney Productions 3 25,952,758 .02 

6. International Business Machines Corp. 21,071,798 .001 

7. Continental Corp 16,972,719 .02 

8. American Hospital Supply Corp 3 14,265.654 .01 

9. Southern Railway Co . ... 13.936,890 .02 

10. Eastman Kodak .. 13,499,525 .001 

11. Exxon Corp .. 12,437,088 .001 

12. Standard Oil Co. of California 11,819,891 .002 

13. General Motors Corp .. 11,522.746 .001 

14. Aetna Life & Casualty Co 10,513,893 .01 

15. Procter & Gamble Co.. 9,879,715 .001 

16. Dow Chemical Co.... 9,442,419 .001 

17. Engelhard Minerals & Chemical Corp 8,101,787 .01 

18. Citicorp 7,775,691 .002 

19. General American Transport Corp . 7.724,165 .02 

20. Schlumberger, Ltd 7,470,603 .001 

i Over 99 percent of the Rockwell International and Southern California Edison and 95 percent of the Pacific Lighting 
stocks as shown above are held in trusts for the benefit of employees of those companies, which trusts specifically restrict 
us to the purchase of company stock, with no ocnventional investment management discretion in the trustee. 

* All of the noted H. F. Ahmanson & Co. stock was received into a group of companion trusts, and for which management 
is substantially shared with outside cofiduciaries. 

3 Over 99 percent of the Walt Disney Productions Co. holding was received through a probate estate and investmen t 
management is shared with outside cofiduciaries. Nearly 80 percent of the American Hospital Supply holding was received 
through 1 probate estate. 

Note: Top 20 holdings represent 21 percent of total assets managed. But see the comments below relative to 6 of the 
larger stock holdings. 

11. There has been some concern that the prudent man rule and 
related fiduciary responsibility provisions in the new pension law (Em- 
ployee Retirement Income Security Act of 1974) has substantially dis- 
couraged or even eliminated direct investments by pension managers, 
in small and medium size companies, in venture capital investments 
or indirect investments through venture capital funds. Could you in- 
dicate, including data, what impact this new pension law has had on 
(a) your venture capital investments (b) diversification of your equity 
investments, and (c) diversification of the types and amounts of your 
investments. 

Although the new pension law has had no material impact on our 
investment decisions to date, we feel the concern pointed out in the 
question to be a valid one and our investment policies could be ma- 
terially affected in the future, dependent on the direction of the inter- 
pretive course of the new law as developed by judicial decisions and 
applicable federal agency regulations. We would point out that the 
ERISA prudent man rule, on its face, does not appear to substantially 
differ from the prudent man rule set out in Section 2261 of the Cali- 
fornia Civil Code which was applicable to employee benefit trust in 
California prior to preemption" by the new federal law. (The cited 
California rule still applies to trusts other than employee benefit 
trusts.) Thus, it is a question of whether the federal court and agency 
construction of the now applicable ERISA rule will be consistent or 
inconsistent with that of the California rule for us to determine what 
if any effect will be had on our investment approach. 



52 

Response of the National City Bank of Cleveland, Ohio 

All June 30, 1 ( .)75 aggregate asset values are estimates. 
1. $2,648,000,000, 
_'. $1,809,000,000. 
3. $1,321,000,000. 
L $1,225,000,000. 

5. Approximately 00 percent. 

6. Xo. 

r. No ( precluded any response to questions 8 and 9). 

8. See answer to 7. 

9. See answer to 7. 

L0. Top 20 common stock holdings: 



Issue 



Common Sept. 15, 1975 Percentage 

shares market of 

as of value outstanding 

Sept. 15, 1975 (thousands) stock 



Standard Oil Co. of Ohio 1, 

Lubrizo ICorp 2, 

TRW, Inc 3, 

Marathon Oil Co 1, 

International Business Machine Corp 

Exxon Corp. 

Dow Chemical Co 

Hanna Mining Co 1, 

Standard Oil Co. of Indiana 

General Motors Corp 

Weyerhaeuser Co 

General Electric Co 

Safeway Stores, Inc 

Sears, Roebuck & Co 

American Telephone & Telegraph Corp 

Abbott Laboratories 

Capital Holding Corp 

Trans Union Corp 

Whirlpool Corp 

General Telephone & Electric Corp 



905, 514 


$136, 244. 2 


828, 637 


127,288.7 


906, 905 


90, 347. 2 


605, 429 


77, 863. 3 


410,516 


77, 484. 9 


596, 452 


52,413.2 


550, 067 


46, 893. 2 


027, 642 


44, 445. 5 


512,301 


23, 886. 


428, 104 


21,886.8 


576,713 


20,112.9 


436, 328 


19,307.5 


388, 985 


18,963.0 


252,479 


15,937.7 


334, 798 


15,275.2 


422,218 


14, 830. 4 


647, 139 


12,376.5 


468, 472 


11,828.9 


515,370 


11,016.0 


490, 665 


10, 794. 4 



7.0 

14.1 

14.5 

5.3 

.3 

.3 

.6 

11.7 

.3 

.15 

.5 

.2 

1.5 

.2 

.05 

1.6 

2.3 

4.7 

1.4 



Note: Any holdings which exceed the aforementioned percentage levels include corporate thrift plans and agency 
accounts in which the bank exercises no direct voting control or investment discretion. 



11, 



Xo material changes. 



Response of the Provident National Bank 



1. As of December 31, 1974, $2,337,086,486. 

2. Not available. 

3. $400,000,000. 

4. $230,000,000. 

5. 57 percent. 

6. a. is o ; b. Xo. 

7. Xo. 

8. Xone. 
.[). Xone. 



53 



10. Top 20 common stock holdings: 



Equity 



Percentage of 
Amount trust assets 



Percentage of 

outstanding 

shares 



Exxon Corp _. $83,800,000 

International Business Machines Corp. 81,200,000 

Merck & Co., Inc 52,200,000 

Kerr-McGee Corp _ _ 37,300,000 

American Telephone & Telegraph Co 35, 100, 000 

I.N.A.Corp 32,300,000 

General Electric Corp 28,400,000 

General Motors Corp. 25,300,000 

V.F. Corp 22,900,000 

American Natural Gas Co. 22, 100,000 

Atlantic Richfield Co 19,800,000 

Standard Oil Co. of Indiana.... 19,700,000 

Lukens Steel Co 18,200,000 

Sears Roebuck & Co 17,600,000 

E.I. du Pontde Nemours & Co 17,000,000 

Continental Oil Co 16,400,000 

Mobil Oil Corp 15,400,000 

Standard Oil of California... 13,800,000 

Betz Laboratories, Inc _. 13,800,000 

Flour Corp 12,600,000 



3.5 


0.57 


3.4 


.33 


2.2 


1.04 


1.5 


2.08 


1.5 


.14 


1.3 


4.54 


1.2 


.47 


1.0 


.29 


.9 


16.11 


.9 


3.38 


.8 


.46 


.8 


.31 


.7 


31.58 


.7 


.23 


.7 


.38 


.7 


.68 


.6 


.41 


.5 


.37 


.5 


5.78 


.5 


4.40 



11 a. The Trust Division does not invest in venture capital invest- 
ments. 

11 b. The Trust Division emphasizes investing in larger market cap- 
italization companies. 

11 c. The Trust Division has always stressed diversification. Re- 
cently, the Employee Benefit Investments have shifted from equities to 
bonds. In the past the ratio was 75 percent to 25 percent. Presently, the 
ratio is 65 percent to 35 percent. 

TRANSACTIONS 



Securities 



Date 



Pur- 
chase 
(P)or 
sale(S) 



Price 

per 

share 



Total 
price 



Number of 

shares Exchange 



Broker 



American Express Mar. 27, 1975 (P) 

Do do (P) 

American Telephone May 14, 1975 (P) 
& Telegraph. 

Armco Steel May 21,1975 (P) 

Do May 15,1975 (P) 

Avon Products Mar. 27,1975 (P) 

Borden.. May 28,1975 (P) 

Commonwealth Edison. June 2, 1975 (P) 

Do ...do....... (P) 

Do June 3,1975 (P) 

Continental Telephone. May 14,1975 (P) 

Do. Mar. 5,1975 (P) 

Do do (P) 

Do do (P) 

Do do (P) 

Do ...do (P) 

Do do (P) 

Do do (P) 

Do June 11,1975 (P) 

Do ...do (P) 

Do.... do (P) 

Do. ...do (P) 

Do do.. (P) 

Do.. do. (P) 

Dow Chemical Mar. 25,1975 (P) 

Do do (P) 

ERCCorp May 8,1975 (P) 

Do do (P) 

Economic Labs May 7, 1975 (P) 

Exxon Corp Mar. 25, 1975 (P) 

Do Apr. 4,1975 (P) 



38^ 

39 

52 

28 y 2 

30 

38 

24 M 

26 

26.10 

26.17 

12 % 

12 y 2 
12 K 
11% 
12% 
13 



$389, 687. 50 
1,300,000.00 

855, 000. 00 
300, 000. 00 
760,000.00 
965,150.00 

"i,"642^6o6" bb* 

523,400.00 
132,600.00 



547, 459. 82 



.- 455,512.50 

72J* - 

72^ 739,475.00 
16 % — - 



17 M 222,375.00 

27 % 273, 750. 00 

69 H 1,048,125.00 

71 1,078,000.00 



2,500 OTC 

7,500 do.... 

25,000 Layoff.... 



30, 000 
10, 000 
20,000 
39, 800 
20, 000 
20, 000 
20,000 
10, 400 

1,900 

900 

10, 400 

5,400 
23, 500 

5,000 
37, 100 

2,100 

2,900 
25. 000 
15,000 
10, 000 

5,000 



NYSE 

do.... 

do.... 

do.... 

3d market. 

do.... 

do.... 

do.... 



MWSE. 
NYSE. 



10,200 



NYSE 

Boston 

MWSE 

3d market. 

do.... 

OTC 



13,000 do.... 

10,000 Secondary. 
15,000 3d market. 
15,400 do.... 



Loeb Rhodes. 

Do. 
Morgan Stanley. 

Solomon Bros. 
Kuhn Loeb. 
Kidder Peabody. 
First Boston. 
Weeden. 

Do. 
Cantor Fitzgerald. 
Jefferies. 
Edwards & Hawly. 

Do. 

Do. 

Do. 

Do. 

Do. 

Do. 
Edwards & Hawly. 

Do. 

Do. 

Do. 

Do. 

Do. 
Jefferies. 

Do. 

Shields Model 

Roland. 

Do. 
Reynolds. 
Weeden. 

Do. 



54 



TRANSACTIONS— Continued 







Pur- 
















chase 


Price 














(P)or 


per 


Total 


Number of 






Securities 


Date 


sale(S) 


share 


price 


shares 


Exchange 


Broker 


Gannett, Inc 


. Mar. 31,1975 


(P) 


33 


990, 000. 00 


30, 000 


NYSE 


. Kidder Peabody. 


Gardner Denver 


. May 22,1975 


(P) 


25 ' s 


2, 664, 375. 00 


105, 000 


Secondary.. 


. Goldman Sachs. 


General Motors Corp... 


. May 8,1975 


(P) 


44 £ 


442, 500. 00 


10, 000 


NYSE 


. Merril Lynch. 


Goodyear Tire & 


Mar. 13, 1975 


(P) 


17 


732,700.00 


43, 100 


2d market.. 


Faulkner Dawkins. 


Rubber. 
















Hobart 


. Apr. 17,1975 


(P) 


21 


224,700.00 


10,700 


OTC 


. Shields & Co. 


Illinois Power 


. May 14,1975 


(P) 


22 H 




25, 000 


MWSE... 


. Halsey Stuart. 


Do 


do 


(P) 


22 i; 


678,125.00 


5,000 


do 


Do. 


Do 


. May 16,1975 


(P) 


21 H 


270,900.00 


12,600 


NYSE 


. Halsey Stuart. 


Do 


. June 3,1975 


(P) 


25 




7,600 




Goldman Sachs. 


Do.... 


do 


(P) 


24 ■; 




5,000 




Do. 


Do 


do 

do 


(P) 
(P) 


24 K 




900 
3,900 


MWSE 


Do. 


Do 




Do. 


Do 


do 


(P) 




336,650.00 


9.600 


NYSE 


Do. 


Do 


. June 12,1975 


(P) 


25 


1,193,200.00 


47,500 


do 


Do. 


Knight Ridder 


Mar. 17, 1975 


(P) 


27 M 


286, 000. 00 


10,400 


do 


. William D. Witter. 


Newspapers. 
















Do 


. Apr. 28,1975 


(P) 


23 H 


570,000.00 


1,500 


4th market. 


. Brandt Zwick. 


Eli Lilly 


. Mar. 27, 1975 


(P) 


71 


710,000.00 


10,000 


NYSE 


. Morgan Stanley. 


Marathon Oil 


. June 3,1975 


(P) 


43 H 


656,250.00 


15, 000 


do 


. Lehman. 


Do 


. May 9,1975 


(P) 


39 ■< 


953,012.50 


23, 900 


3d market.. 


. Jefferies. 


Do. 


. May 7,1975 


(P) 


37 u 


464, 325. 00 


12, 300 


NYSE 


. Solomon Bros. 


Martin Marietta 


. Mar. 20, 1975 


(P) 


16 y A 




6,500 




Becker. 


Do. 


do 


(P) 


16 Ks . 




1,500 




Do. 


Do 


.. do 


(P) 


16 




12,000 




Do. 


Do 


do 

do.. 


(P) 
■ (P) 






1,000 
19, 000 


PCSE 

NYSE 


Do. 


Do.... 




313,750.00 


Do. 


Maytag 


. May 9,1975 


(P) 


27 > 4 


$490, 500. 00 


18,000 


...do 


. White Weld. 


Mobil Oil Corp 


. Mar. 21,1975 


(P) 


40 \i 




5,000 


...do 


. Oliphanl 


Do. 


do 


. (P) 


40 y % 


404 232. 50 


1,900 


...do 


Do. 


National Gypsum 


. May 28,1975 


(P) 


12 y A 


232,750.00 


19, 000 


...do 


. Smith Barney. 


Do 


. May 15, 1975 


(P) 


13 \i 


132,500.00 


10, 000 


3d market. 


. Jefferies. 


Pennsylvania Power & 

Light. 
RCA Corp 


Apr. 3,1975 


(P) 


18 


450, 000, 00 


25, 000 


Secondary. 


. First Boston. 


. June 10,1975 


(P) 


19 Hi 


203,891.00 


10, 600 


NYSE 


. Drexel Burnham 
&Co, 
&Co. 
















Scott and Fetzer 


. Mar. 12, 1975 


(P) 


13 y 2 


280, 800. 00 


20, 800 


...do 


. Gruman. 


Seaboard Coastline 


Mar. 24, 1975 


(P) 


28 \i 






...do 


. Mitchell 


Industries. 














Hutchinson. 


Do. 


do 


(P) 


28 M 


437,812.50 


15, 500 


...do 


Do. 


Do 


. Apr. 17,1975 


(P) 


27 X 


283, 050. 00 


10, 200 


...do 


. Tucker Anthony. 


Sedco, Inc 


. May 7, 1975 


(P) 


31 H 


948,750.00 


30, 000 


...do 


. First Boston. 


Sony Corp 


. Feb. 24,1975 


(P) 


8>2 


85, 000. 00 


10, 000 


OTC 


. Donaldson Lufkin. 


Southwestern Public 


June 4,1975 


(P) 


10 u 


205 r 000.00 


20, 000 


NYSE 


. Hugh Johnson. 


Service. 
















Do 


. June 2,1975 


(P) 


10 


500, 000, 00 


50,000 


...do 


. Paine Webber. 


Standard Oil of 


Mar. 20, 1975 


(P) 


25 M 


1,010,000.00 


40, 000 


3d market.. 


Weeden. 


California. 
















Sterling Drug 


. May 13,1975 


(P) 


20 


200, 000. 00 


10, 000 


NYSE 


. Halsey Stuart. 


Syntex.. 


. May 7,1975 


(P) 


40 M 


401,250.00 


10, 000 


MWSE 


Jessup & Lamont 


Texaco. 


. Apr. 16, 1975 


(P) 


24 y 2 . 




50, 000 




Goldman Sachs. 


Do 


......do....... 

do. 


(P) 
(P) 






3,500 
46, 500 


MWSE 

NYSE 


Do. 


Do 




1, 225, 000. 00 


Do. 


United Aircraft 


. Mar. 21, 1975 
do 


(P) 
(P) 


40 % . 
40 n . 




1,100 
4,100 


2d market.. 
...do 


Donaldson Lufkin. 


Do.. 




Do. 


Do 


do 


(P)' 


40 U . 




12,900 


...do 


Do. 


Do 


do 

do 


(P) 
(P) 


40 % ■ 

40 y 2 




100 
2,800 


...do 

...do.... 


Do. 


Do 


852,823.75 


Do. 


U.S. Fidelity & 

Guaranty. 
Caterpillar Tractor CV 


Mar. 24, 1975 


(P) 


31 y 


630, 000. 00 


20, 000 


NYSE 


. Jefferies. 


June 3,1975 


(P) 


100 


1, 500, 000. 00 


1, 500, 000 


OTC 


, Neuberger 


5 l 2 percent 

6 30 2000. 
Champion Inter- 














Berman. 


Apr. 2,1975 


(P) 


15 y 2 


155,000.00 


10, 000 


NYSE 


. Kidder Peabody. 


national 1.20 CV 
PFD. 
Mesa Petroleum Co. 
















May 7, 1975 


(P) 


23 


230, 000. 00 


10, 000 


OTC 


. Donaldson Lufkin 


$1.60 CUM CV PFD. 














& Jenrette. 


Pennwalt 1.60 CM CV 


Apr. 2,1975 


(P) 


20 


200, 000. 00 


10,000 


PBW 


. Parrish. 


2NDSER PFD B. 
















Almaden Vineyards, 

Inc. 
American Telephone 

& Telegraph. 
Armstrong Cork 


May 8, 1975 


(S) 


9 H 


116,462.50 


12,100 


PCSE 


. Jefferies & Co. 


Apr. 7,1975 


(S) 


y 


8, 000. 00 


16, 000 


OTC 


. Butcher & Singer. 


. May 1,1975 


(S) 


25 H 


772, 500. 00 


30, 000 


NYSE 


. Goldman Sachs. 


Do.. 


. May 7, 1975 


(S) 


26 




20, 000 


...do 


. First Boston. 


Do. 


......do....... 


(S) 


26 M 


1, 044, 000. 00 


20, 000 


...do 


Do. 


Do 


. May 6, 1975 


(S) 


26 y 2 


795, 000. 00 


30, 000 


...do 


. Goldman Sachs. 


Do 


. May 29, 1975 


(S) 


21 M 


619,875.00 


28, 500 


...do 


. G. S. Grumman. 



55 



TRANSACTIONS— Continued 







Pur- 
















chase 


Price 














(P)or 
sale(S) 


per 


Total 


Number of 






Securities 


Date 


share 


price 


shares 


Exchange 


Broker 


Avon Products 


. May 1, 1975 


(S) 


45 % 


453,750.00 


10, 000 


3d market.. 


Jefferies. 


Do 


.do 


(S) 


46 


460, 000. 00 


10, 000 


NYSE 


Drexel Burnham. 


Black & Decker 


. Apr. 18, 1975 


(S) 


33 H -■ 






...do 


. Faulkner Dawkins. 


Do 


do 


(S) 


33 M .. 






...do 


Do. 


Do 


do 


(S) 


33 H 1 


1, 448, 044. 63 


43,750 


...do 


Do. 


Borden, Inc 


. Apr. 1, 1975 


(S) 


23 




100 


...do 


Solomon Bros. 


Do... 


do 


(S) 


22 2, 297, 286. 51 


104, 000 


...do 


Do. 


Carborundum. 


. Apr. 14,1975 


(S) 


35 1 


i, 657, 259. 22 


47, 600 


...do 


Loeb Rhodes. 


Christiana Securities. . 


. May 1, 1975 
do 


(S) 
(S) 


120 

120 14 -■ 




1,000 
1,000 


OTC. 

...do 


Solomon Bros. 


Do 




Do. 


Do 


do 


(S) 


120 y 2 -• 




1,000 


...do 


Do. 


Do 


.do 


(S) 


120 % .. 




1,000 


...do 


Do. 


Do 


do 


(S) 


121 




4,000 


...do 


Do. 


Do 


do 


(S) 


121 y 2 .. 




1,000 


...do 


Do. 


Do.. 


do 


(S) 


121 y K i 


,, 208, 750. 00 


1,000 . 


...do 


Do. 


Continental Invest- 


June 5,1975 


(S) 


X A 


5, 355. 50 


21,422 . 


...do 


. L. C. Wegard Co. 


ment Corp. Mass. 
















Dayco Corp 


. May 16, 1975 


(S) 


10 X 


105, 000. 00 


10, 000 


NYSE 


Yaknall Biddle 
Mtchell 


Digital Equipment 


. Apr. 18, 1975 


(S) 


102 X-. 




100 




Hutchinson. 


Do... 


.do 


(S) 


102 y 2 _. 




100 




Do. 


Do 


do 


(S) 


102 %.. 




1,000 




Do. 


Do.. 


do 


(S) 


102 %.. 




300 




Do. 


Do 


do 


(S) 


103 .. 




6,000 




Do. 


Do 


do 


(S) 


103 H- 




1,000 




Do. 


Do 


do 


(S) 


103 K. 




500 




Do. 


Do... 


do 


(S) 


103 y 8 . 




200 




Do. 


Do 


do 

do 


(S) 
(S) 
(S) 


103 H-- 

103 y 8 . 




650 
2,700 




Do. 


Do... 




Do. 


Do 


...do . 


103 %.. 




2,600 




Do. 


Do.. 


do 


■ (S) 


103 y 8 .. 




100 




Do. 


Do 


do 

do 


(S) 
(S) 


104 .. 

104 y 8 . 




200 
200 




Do. 


Do.. 




Do. 


Do... 


do 


(S) 
(S) 
(S) 


104 y A .. 




1,100 




Do. 


Do. 


do 

do 






1,300 
15,400 


MWSE 

NYSE 


Do. 


Do 


1 


,723,136.24 


Do. 


P. R. Donnelley & 

Sons. 
Dow Chemical... 


June 16, 1975 


(S) 


22 Ml 


,104,627.75 


50,000 , 


do 


Edwards Hawly. 


. May 29, 1975 


(S) 


86 % 


936, 900. 00 


10,800 


MWSE... 


. Merrill Lynch. 


Eaton Corp 


. June 10, 1975 


(S) 


$1.00 


30, 000. 00 


30, 000 


OTC 


Loeb Rhodes. 


Federated Department 


Apr. 18,1975 


(S) 


45^ 


918. 528. 18 


20, 300 


NYSE 


. Jessup & Lamont 


Stores. 
















Fluor Corp. 


. June 16,1975 


(S) 


39 % 


395, 242. 05 


10,000 


do 


. Wertheim. 


General Electric 


. May 29,1975 


(S) 


44 % 


903, 950. 00 


20, 200 


3d market.. 


. Jefferies & Co. 


Grolier, Inc 


. May 16, 1975 


(S) 


2 % 


37, 537. 50 


14, 300 


NYSE 


. Yarnall Biddle. 


Gulf Oil 


. May 9,1975 


(S) 


19 


233,757.00 


12, 303 


PCSE 


. Shearson Hayden 


1 i 














Stone. 


" Do. 


. Apr. 16,1975 


(S) 


19 % 


980, 880. 25 


50, 000 


NYSE 


. Goldman Sachs. 


Household Finance... 


. Mar. 31, 1975 


(S) 


16 y 2 1, 650, 000. 00 


100, 000 


do 


. Oppenheimer. 


Howard Johnson 


. May 9,1975 


(S) 


13 % 


138, 750. 00 


10,000 


do 


Do. 


Do ... 


. May 29, 1975 


(S) 


12 % 


840, 825. 00 


66, 600 


do 


. Loeb Rhodes. 


Kellogg Co 


. Apr. 10, 1975 


(S) 


16 H 


207, 039. 02 


12,400 


do 


. Woods, Struthers & 
Winthrop, Inc. 


Kennecott Copper 


. Apr. 29,1975 


(S) 


36 y 8 \ 


>, 911, 254. 33 


81,000 


...do 


. Oppenheimer. 


Kresge 


. May 29,1975 


(S) 


28 y 2 


513, 000. 00 


18,000 


...do 


. Blythe Eastman. 


Masco 


do.. 


. (S) 


48 H 


560, 625. 00 


11,500 


3d market. 


. Cantor Fitzgerald. 


Maytag 


. Apr. 18, 1975 


(S) 


28 H 


748, 785. 62 


26, 200 


NYSE 


. White Weld. 


Mesa Petroleum 


. June 2,1975 


(S) 


22 . 




4,300 


...do 


. E. F. Hutton. 


Do 


.do.. 


(S) 


22 y 8 .. 




400 


...do 


Do. 


Do 


do 

do 


(S) 
(S) 


22 H- 
22 s/8 




11,600 
1,200 


...do 

...do 


Do. 


Do... 


361, 550. 00 


Do. 


Do 


. May 30,1975 


(S) 


21 .. 




22, 000 


...do 


Do. 


Do... 


......do 


(S) 


21 H 


673, 250. 00 


10,000 


...do 


Do. 


Middle South Utilities 


. May 14, 1975 


(S) 


13 y 8 .. 




40, 000 




Halsey Stuart. 


Do 


do 


(S) 


13 M- 




10, 000 




Do. 


Do 


do. 

do 


(S) 
(S) 






40, 000 
10, 000 


...do. 

MWSE 


Do. 


Do 




629, 500. 00 


Do. 


Do. 


. May 22,1975 


(S) 


13 y 2 


594, 000. 00 


44, 000 


NYSE 


Do. 


Do 


. May 16,1975 


(S) 


13 y 2 


337, 500. 00 


25, 000 


...do 


Do. 


Olin Corp 


. June 16, 1975 


(S) 


26 y 2 .. 






...do 


. Kuhn Loeb. 


Do 


do 


(S) 


26 y % 


391,299.76 


14, 863 


...do 


Do. 


Philadelphia Electric 


May 13,1975 


(S) 


13 %-. 






...do 


. Halsey Stuart 


Co. 














Bache. 


Do 


do 


. (S) 


13 y 2 


162, 164. 50 


11,902 


...do 


Do. 


Do 


. Apr. 23,1975 


(S) 


12 H 


165,750.00 


13, 000 


...do 


. First Boston. 


Ramada Inns 


. May 27, 1975 


(S) 


4.95 


148, 500. 00 


30, 000 


3d market.. 


. Jefferies. 


Revco D S Inc 


. May 20,1975 
do 


(S) 
(S) 


33 %.. 

33 14 




12, 100 
1,000 


OTC. 

...do 


. Rear Stearn. 


Do 


413,237.50 


Do. 



56 

\CTIONS— Continued 



Securities 



Date 



Pur- 
chase Price 
(P) or per 
sale(S) share 



Total 
price 



Rorer Amchen May 9,1975 

SeaboardCoastIir.es... May 15,1975 

Smithkline Corp June 5,1975 

Do June 16,1975 

U.S. Gypsum Co Apr. 1,1975 

United Technology May 16,1975 

Do May 20. U75 

Do... May 27,1975 

Universal Oil Products. May 12. 1975 

Viacom International, Apr. 25, 1975 

Inc. 

Virginia Electric & Apr. 8, 1975 (S) 

Power Co. 

West Point-Pepperell.. May 15,1975 (S) 

Weyerhaeuser Apr. 16.1975 (S) 

Winter Park June 3,1375 (S) 

Telephone. 

Economic Labs CV May 6, 1975 

S Do 5.125 percent 

Junel, 1991. 

S. S. KresgeCV6 Apr. 30.1975 (S) 

percent July 15, 

1999. 

Do. May 1,1975 (S) 



(S) 
(S) 
(S) 
(S) 
(S) 

(S) 
(S) 
(S) 
(S) 
(S) 



(S) 



23 
23 
56 
54 
91 

48 
43 
48 



36 
36 

6 *A 

112 



361,100.00 
230, 000. 00 
560. 000. 00 
1,350.000.00 
188. 004. 28 

132. 000. 00 
528 000. GO 
480. 000. 00 
326. 250. CO 
142,852.50 



10 H 1,062,500.00 



1, 800. 000. 00 
501.150.92 
155,250.00 



Number of 

shares Exchange 



99 '4 496,250.00 
99 H 497, 500. 00 



Broker 



15, 700 
10, 000 
10, 000 
25, 000 
10, 000 



NYSE.. 
...do... 
...do... 
.....do. 
do. 



27.500 ... 
11,000 ... 
10,000 ... 
22.500 ... 
18,140 ... 



10,000 do. 

50,000 do. 

14,000 MWSE. 
23.000 OTC... 



1,064,000.00 950,000 do. 



500,000 do. 

500,000 do. 



. First Manhattan. 
. Solomon Bros. 
. Shields Model. 
. Oliphant. 
. W. H. Newt:lds 

son. 
. Goldman Sachs. 

Do. 

Do. 

Do. 
. Drexel Burnham. 

Do. 

. Lehman Bros. 
. E. F. Hutton. 
.. Drexel Burnham. 

.. Wechsler & 
Krumholz. 

._ Kidder Peabody. 



Do. 



Trust Division 20 largest common stock holdings 
(As of December 31, 1971) 

Company Marlet mine 

(million** 

International Business Machines Corp $101. 5 

Standard Oil Company of New Jersey 76. v 

General Motors Corp 69. 4 

Merck & Company. Inc 45. 2 

Genera] Electric Co 44. 1 

VF Corp 4(». 7 

Sears, Roebuck & Company 32. 2 

Kerr-McGee Corp , 29. 9 

E. T. Du Pont de Nemours & Company 28. 6 

Philadelphia Electric Co *_ 27. 1 

Mobil Oil Corp 24. 1 

American Telephone & Telegraph Co 23. 9 

Gulf Oil Corp . 19. 4 

INA Corp 18. 8 

Kraftco Corp 17.4 

Standard Oil Company of Indiana 16. 7 

Proyident National Corp 15. 9 

Standard Oil Company of California 15. 8 

Texaco, Inc 15. 8 

American Electric Power Company, Inc 14. 3 



57 

Trust Division 20 largest common stock holdings 
(As of December 31, 1972) 

Market value 
Company (millions of dollars) 

International Business Machines Corp $125.4 

Exxon Corp 97. 6 

General Motors Corp 66. 3 

Merck & Company, Inc 63. V 

General Electric Co 51.8 

VF Corp 49. 

Kerr-McGee Corp 40. 

Seal's, Roebuck & Company 34. 4 

Mobil Oil Corp 30. 

E. I. du Pont de Nemours & Company 26. 8 

INA Corp 25. 1 

American Telephone & Telegraph Co 24.4 

Philadelphia Electric Co 23.9 

American Natural Gas Co 22. 3 

Standard Oil Company (Indiana) 20. 5 

Standard Oil Company of California 20. 3 

Provident National Corp 20. 1 

Eastman Kodak Co 19. 9 

Gulf Oil Corp 15. 3 

Texaco, Inc 15.2 

Trust division, 20 largest common stock holdings 
(As of December 31, 197b) 

Market value 
Company (millions of dollars) 

1. Exxon Corp 83.8 

2. IBM Corp 81.2 

3. Merck & Co., Inc 52. 2 

4. Kerr-McGee Corp 37. 3 

5. American Tel. & Tel. Co 35. 1 

6. INA Corp 32.3 

7. General Electric Co 28. 4 

8. General Motors Corp 25. 3 

9. V.F. Corp 22.9 

10. American Natural Gas Co 22. 1 

11. Atlantic Richfield Co 19. 8 

12. Standard Oil Co. Ind 19. 7 

13. Lukens Steel Co 18. 2 

14. Sears. Roebuck & Co 17.6 

15. E. I. du Pont de Nemours & Co 17. 

16. Continental Oil Co 16.4 

17. Mobil Oil Corp 15. 4 

18. Standard Oil of Cal 13. 8 

19. Betz Laboratories, Inc 13. 8 

20. Fluor Corp 12.6 

Response of the Mercantile-Safe Deposit & Trust Co. 

1. As of June 30, 1975, $2.6 billion of assets were under the invest- 
ment management of Mercantile-Safe Deposit and Trust Company. 

2. It is estimated that Mercantile-Safe Deposit and Trust Company 
exercised sole investment authority over $1.04 billion in assets as of 
June 30, 1975. 



5S 

3. As of June 30, 1975, $453 million of employee benefit funds 
under investment management of Mercantile-Safe Deposit and Trust 
Company. 

[mated that sole investment authority was exercised over 
million of employee benefit funds as of June 30, 1975. 

5. Sixty-seven percent of employee benefit funds were invested in 
common stocks on June 30, l- 

rhere is no one security which represents more than four percent 
of our employee benefit funds or total assets over which we ex( 
investment discretion. 

7a. 

7b. Information as to the percent of holdings of any particular com- 
pany over which we have investment discretion is not normally dis- 
closed. ( )f publicly-held companies (companies registered under S 
tion 12 of the Securities Act of 1034). we hold as fiduciary, e: 
the sole right to vote more than 8 percent of the voting stock of the 
following: Mercantile Bankshares Corp., 12.1 percent of combined 
common and convertible preferred. 

In addition, there are 52 closely-held companies in which over 8 per- 
cent of the outstanding shares are held by Mercantile-Safe Deposit and 
Trust Company. 

8. Not applicable. 

The Trust Division does not have access to credit files or balances 
information. 

10. Top 20 common stock holdings : 



International Business Machines 

Exxon Corp 

Reynolds (R.J.) Industries, Inc 

A. E. Stilev Manufacturing Co. 1 

American Home Products Corp 

Eastman Kodak Co 

General Electric Co 

Sears, Roebuck & Co 

Warner- Lambert Co 

Minnesota Mining & Manufacturing Co. 

Lilly (E'i)& Co 

American Telephone & Telegraph Co.. 

Merck & Co., Inc 

U.S. Fidelity & Guaranty Co 

Procter & Gamble Co 

Johnson & Johnson 

Atlantic Richfield Co... 

Burroughs Corp 

General Motors Corp 

Black & Decker Manufacturing Co 

Total 



Percent of 








outstanding 




Percent of 


shares on 


Dec. 31, 1974 


total holdings 


Sept. 16, 1975 


market value 


on Dec. 31, 


1974 


0.3 


$69. 034, 560 




7 


.3 


60,651,855 




3.0 


2.9 


57,217.592 




? 8 


2 40. 8 


48. 243. 301 




2.3 


1.0 


43,066,231 




2.1 


.4 


37, 100, 965 




1.8 


.3 


35, 592, 334 




1.7 


.5 


30,151,521 




1 5 


1.5 


29, 536. 364 




1 5 


.7 


26. 209. 753 




1.3 


.4 


23,141,760 




1.1 


.1 


22,641,654 




1.1 


.6 


22,619,607 




1.1 


4.7 


20, 244, 830 




1.0 


.4 


19,921,941 




1.0 


.5 


19,220,429 




.9 


.5 


18,625.076 




.9 


.9 


18,153,446 




.9 


.2 


17.807,817 




.9 


2.6 


17,350.422 




.9 



31.2 



1 Shares being distributed. 
i Mar. 1, 1975. 

11. a. Not applicable, since we have not considered venture capital 
investments appropriate for retirement accounts. 

b. Our policies for diversification inequities are the same as before. 

c. The new law coupled with stock market volatility in recent years 
resulted in our shifting to a minimum of 25 percent in bonds to cover 
more of the actuarial requirement through income yield. 



59 

Response of the Fidelity Bunk 

1. $1,979,539,576. 

2. $1,427,160,428. 

3. $310,869,826. 

4. $310,564,518. 

5. 42.8 percent. 

6. We hold no security representing over 4 percent of total assets 
under which we exercise investment discretion in whole or in part. 
The following common stocks at market value 4 aggregate in excess of 
4 percent of discretionary employee benefit funds. These common stock 
holdings are obviously substantially held in other than employee 
benefit assets. 

Percent of aggregate 
c)i!})J'n:< r hi nefii plans 

1. IBM 24.0 

2. Campbell Soup L8. 4 

3. Exxon Corp 17.5 

4. Merck & Co 13. 4 

5. E. I. duPont 13.3 

6. SmithKline Corp 12.6 

7. General Motors 11.9 

8. General Electric 10. 5 

9. American Tel. & Tel 9. 6 

10. Phillips Petroleum !). 4 

11. Sears, Roebuck & Co 8. 3 

12. Mobil Oil 7.6 

13. Texaco, Inc 7. 5 

14. INA 7.1 

15. Dow Chemical 5. 9 

16. Atlantic Richfield 5. 7 

17. Eastman Kodak 4. 7 

18. Standard Oil of Indiana 4. 6 

19. Rohm & Haas 4.3 

7. We hold the following common stocks which represent over 8 per- 
cent of the company's outstanding shares : 

Percent of out- 
standing slia res 

1. Fidelcor, Inc 11. 2 

2. Penn Virginia Corp 12. 5 

3. West Co., Inc 27.4 

Officer as director 

8. 1. Fidelcor, Inc Parent of The Fidelity 

Bank. 

2. Penn Virginia Corp.* E. B. Leisenring, Jr., 

President of Penn 
Virginia Corp. and 
Director of Fidelcor, 
Inc. 

3. West Co., Inc None. 

*Penn Virginia Corp. owns about 33 percent of Westmoreland Coal Co. Mr. E. B. Leison- 
ring, Jr. is president of this company. Mr. Samuel H. Ballam. Jr., president of Fidelcor, 
Inc. and The Fidelity Bank is a director as is William R. Klaus, esquire. Mr. Klaus is a 
director of Fidelcor, Inc. and The Fidelity Bank. 

9. Not available. 



60 
LO. Top 20 common stock holdings 



UNIVERSITY OF FLORIDA 



3 1262 09113 3875 



1. International Business Machines.. 

2. Campbell Soup Co 

3. Exxon Corp. 

4. Merck & Co., Inc 

5. E. I. du Pont de Nemours 

6. SmithKline Corp 

7. General Motors Corp 

8. General Electric Co 

9. American Telephone & Telegraph. 

10. Phillips Petroleum Co 

11. Sears, Roebuck & Co 

12. Mobil Oi! Corp 

13. Texaco, Inc 

14. INACorp 

15. Dow Chemical Co 

16. Atlantic Richfield Co 

17. Eastman Kodak Co... 

18. Standard Oil Co. of Indiana 

19. Rohm & Haas Co 

20. American Electric Power Co 

Total.. 



Market value 


Percent of 
shares outstand- 
ing 


Percent of 

total assets 

managed 


$74,677,512 
56,877,617 
54, 327, 585 
41,737,106 
41, 354, 568 
39, 190, 365 


0.3 
6.2 
.4 
.4 
.9 
5.8 
.4 
.5 
.1 
.9 
.3 
.6 
.4 
.8 
.4 
.4 
.1 
.2 
2.3 
1.2 


3.8 
2.9 
2.7 
2.1 
2.1 
2.0 


37,195,446 


1.9 


32,531,312 


1.6 


30, 025, 869 


1.5 


29, 259, 100 


1.5 


25,933,313 


1.3 


23, 603, 220 


1.2 


23,255,545 


1.2 


22, 087, 688 


1. 1 


18,419,995 


.9 


17, 720, 389 


.9 


14, 700, 578 


.7 


14,230,111 


.7 


13,385,398 


.7 


12, 126, 168 


.6 







31.4 



Note: All valuations were as of Dec. 31, 1974. The valuations as of June 30, 1975 were not available, 



Response of the Bank of New York 

We wish, not to participate in your present survey. 

o